by Mark Morgenfruh | Jun 12, 2025 | Strategic Compensation
If you don’t have in-house compensation expertise, we can help. From job valuations to ensure you’re not losing your top talent for sub-par pay, to full compensation programs with all the needed governance features, we help every business in America 
How Process and Technology Impact Compensation Programs
Compensation programs are critical to attracting, motivating, and retaining talent in any organization. However, the effectiveness and efficiency of these programs depend heavily on the underlying processes and technology used to design, implement, and manage them. Over recent years, advancements in technology coupled with streamlined compensation processes have transformed how companies approach pay strategies, resulting in more accurate, fair, and strategic compensation management.
This article explores how process and technology impact compensation programs, their benefits, and considerations for organizations aiming to optimize their compensation efforts.
The Role of Process in Compensation Programs
At its core, a compensation program is a series of structured processes that determine how employees are rewarded. These processes include job analysis and evaluation, salary benchmarking, pay structure development, performance review integration, pay increase allocation, and incentive administration.
Key Processes in Compensation Programs
- Job Analysis and Evaluation: Defining roles and responsibilities, assessing job value, and ranking positions internally.
- Market Benchmarking: Collecting and analyzing salary data from external sources to ensure competitive pay.
- Pay Structure Design: Creating salary ranges and grades to guide consistent pay decisions.
- Performance Management Integration: Linking compensation decisions with employee performance evaluations.
- Pay Review and Adjustment: Scheduling merit increases, bonuses, or promotions systematically.
- Compliance and Governance: Ensuring pay practices adhere to legal and internal policy requirements.
When these processes are well-defined, documented, and consistently followed, compensation programs become transparent, equitable, and aligned with business goals.
Process-Driven Benefits
- Consistency: A formal process reduces arbitrary or biased pay decisions.
- Transparency: Clear procedures help employees understand how compensation is determined.
- Strategic Alignment: Processes ensure pay supports organizational objectives, such as rewarding performance or controlling costs.
- Compliance: Standardized processes minimize risks related to legal violations.
- Data-Driven Decisions: Systematic processes enable use of accurate data for benchmarking and pay setting.
However, without proper process management, compensation programs risk inconsistency, employee dissatisfaction, and increased legal exposure.
How Technology Transforms Compensation Programs
Technology plays a pivotal role in supporting, automating, and enhancing compensation processes. Modern Human Capital Management (HCM) systems, compensation management software, and analytics platforms offer comprehensive tools to streamline compensation administration and strategic planning.
Automation and Efficiency
Technology automates many manual compensation tasks:
- Salary Planning: Automated workflows for merit increase and bonus approvals reduce administrative burden.
- Data Integration: Systems pull external market data and internal HR records seamlessly.
- Error Reduction: Automated calculations and validations reduce human errors in pay processing.
- Compliance Checks: Built-in rules enforce pay equity and legal requirements automatically.
This automation saves time, reduces errors, and frees HR professionals to focus on strategy rather than administration.
Enhanced Data Management and Analytics
Modern compensation technology centralizes vast amounts of data:
- Employee Compensation Data: Base pay, bonuses, equity, and benefits.
- Market Salary Surveys: Real-time or regularly updated benchmark data.
- Performance Metrics: Integration with performance management systems.
- Budget and Forecasting: Tools to plan and simulate pay budgets.
With advanced analytics, organizations gain insights such as pay equity gaps, performance-to-pay alignment, and turnover risk related to compensation. These insights enable data-driven decisions that improve fairness and competitiveness.
Improved Communication and Transparency
Technology also enhances communication around compensation:
- Self-Service Portals: Employees can view their compensation details, performance results, and total rewards statements anytime.
- Scenario Modeling: Managers can run “what-if” pay scenarios to understand impacts before finalizing decisions.
- Feedback Loops: Digital tools facilitate capturing employee input on compensation fairness and satisfaction.
Greater transparency helps build trust and engagement, reducing misunderstandings or perceptions of unfairness.
Examples of Technology Impact
- Compensation Management Software: Platforms like Workday, Oracle HCM, and SAP SuccessFactors provide integrated modules for salary planning, bonus management, and equity administration.
- Market Pricing Tools: Services such as Radford, Mercer, or Payscale integrate directly with compensation systems to provide up-to-date salary benchmarks.
- Analytics and Reporting: Dashboards enable real-time monitoring of pay equity by gender, ethnicity, or role to comply with regulations like the Equal Pay Act or recent pay transparency laws.
- Workflow Automation: Automated approvals ensure compensation decisions go through the proper channels and adhere to budget constraints.
Challenges and Considerations
While process and technology bring many advantages, organizations must navigate several challenges:
- Change Management: Introducing new technology or formalizing processes can meet resistance. Clear communication and training are essential.
- Cost and Complexity: Implementing advanced compensation software can be expensive and complex, especially for smaller organizations.
- Data Quality: Technology effectiveness depends on accurate, clean, and up-to-date data.
- Customization vs. Standardization: Balancing the need for standardized processes with flexibility to address unique cases.
- Security and Privacy: Compensation data is sensitive, requiring robust protections against breaches.
Best Practices for Leveraging Process and Technology
To maximize the positive impact on compensation programs, companies should:
- Map and document compensation processes clearly before automating them.
- Select technology solutions that integrate with existing HR systems and support scalability.
- Ensure data accuracy by establishing regular audits and updates.
- Train managers and employees on using compensation tools and understanding the processes.
- Use analytics strategically to identify issues like pay inequities or performance misalignment.
- Maintain flexibility to adjust compensation rules as business needs change.
Conclusion
Process and technology are foundational pillars that significantly influence the success of compensation programs. Well-defined processes ensure fairness, consistency, and strategic alignment, while technology brings efficiency, accuracy, data insights, and enhanced communication. Together, they enable organizations to design, administer, and evolve compensation programs that attract and retain top talent, motivate high performance, and comply with regulatory requirements.
Organizations investing in the right processes and technologies for compensation management are better positioned to respond to competitive labor markets and changing workforce expectations, ultimately supporting business growth and sustainability.
by Mark Morgenfruh | Jun 11, 2025 | Total Rewards
Imagine having the critical data to help you make the best choices for your benefit plans? Does one size fit all? What if you add a benefit plan an no one wanted it? Knowing what your people want and what’s available on the market are key to attracting and retaining key talent. We help every business in America
Understanding Benefits Surveys: What They Are and How Companies Can Use Them Strategically
In a competitive job market, employee benefits are no longer just “nice-to-have” perks—they’re essential components of a compelling total rewards package. To ensure their benefits offerings are competitive, cost-effective, and aligned with employee expectations, many organizations turn to Benefits Surveys. These tools provide vital market intelligence and employee insights that can shape smarter, more strategic benefits decisions.
This article explores what Benefits Surveys are, how they work, and how companies can use them to improve both employee satisfaction and business performance.
What Are Benefits Surveys?
Benefits Surveys are structured tools designed to gather and analyze data related to employee benefits. These surveys can be categorized into two primary types:
- External (Market) Benefits Surveys
These are conducted by third-party firms, industry groups, or consulting agencies. They collect aggregate data from multiple organizations about:
- The types of benefits offered (e.g., health, dental, vision, retirement)
- Employer contribution levels
- Eligibility rules and waiting periods
- Utilization rates
- Trends in new or emerging benefits (e.g., fertility support, mental health, remote work stipends)
Purpose: Help organizations benchmark their benefits against similar companies based on industry, size, region, or other relevant criteria.
- Internal (Employee) Benefits Surveys
These are surveys administered within an organization to assess employee:
- Awareness and understanding of current benefits
- Satisfaction with existing offerings
- Preferences and priorities for future enhancements
- Utilization patterns and unmet needs
Purpose: Help employers understand what their own employees value most—and least—about their benefits, enabling more targeted and effective offerings.
Why Benefits Surveys Matter
Benefits Surveys are a powerful tool because they provide:
- Data-driven insights: Rather than relying on assumptions or anecdotal feedback, HR leaders can base benefits decisions on real-world evidence.
- Market competitiveness: Ensures your benefits keep pace with industry standards, helping attract and retain talent.
- Cost optimization: Helps prioritize high-impact benefits and eliminate underused or costly programs with low ROI.
- Employee engagement: Signals that leadership cares about employee needs and well-being.
How Companies Use External Benefits Surveys
External benefits benchmarking is essential for staying competitive and compliant. Here’s how companies leverage this data:
- Comparative Benchmarking
Organizations compare their benefits to others in their industry, region, or size category. Key metrics often include:
- Employer vs. employee premium contributions
- Deductible and co-pay amounts
- PTO/vacation policies
- Retirement match percentages
- Wellness and supplemental offerings
This helps HR answer questions like:
- “Are we offering enough paid parental leave?”
- “Are our healthcare contributions in line with peers?”
- “What mental health benefits are becoming standard in our industry?”
- Designing or Refreshing Benefits Packages
Market survey data is often used when:
- Launching a new benefits program (e.g., adding telehealth)
- Reevaluating annual offerings during open enrollment
- Preparing for mergers or acquisitions that require benefit harmonization
- Executive and Board Presentations
Benefits benchmarking data gives HR and total rewards professionals the credibility and backing to advocate for strategic changes—such as expanding benefits or adjusting contributions—especially when pitching to senior leadership or finance teams.
- Vendor Selection and Negotiation
Survey insights help HR evaluate whether their benefits vendors are offering competitive products and rates, strengthening their negotiation position.
How Companies Use Internal Benefits Surveys
Gathering employee feedback is equally crucial for designing benefits that resonate. Companies typically use internal surveys to:
- Assess Satisfaction and Utilization
Questions might include:
- “How satisfied are you with our current health plan?”
- “Do you use the wellness program?”
- “Which benefits are most important to you?”
This data helps identify underutilized benefits and determine whether dissatisfaction exists due to quality, access, or communication gaps.
- Guide Future Benefits Strategy
Surveys can reveal trends and preferences, such as:
- A growing demand for mental health resources
- Interest in student loan repayment support
- Greater value placed on flexible work over traditional perks
Insights like these enable HR to offer benefits that matter most to the workforce.
- Improve Communication
Often, employees aren’t aware of all the benefits available. Surveys can identify knowledge gaps, helping HR tailor communications and increase engagement with underused programs.
Best Practices for Conducting and Using Benefits Surveys
For External Surveys:
- Use reputable sources: Consider partners like Mercer, Willis Towers Watson, SHRM, or local business associations.
- Match peer group profiles: Make sure the comparison group reflects your company’s size, sector, and region.
- Look beyond cost: Pay attention to plan design details, not just premiums or contributions.
- Combine with internal data: Use market data alongside employee preferences to make informed decisions.
For Internal Surveys:
- Keep surveys anonymous to encourage honest feedback.
- Use clear, unbiased language and avoid jargon.
- Time them well: Conduct surveys ahead of open enrollment or major program changes.
- Include both quantitative and qualitative questions (e.g., multiple choice and open-ended responses).
- Close the loop: Share results with employees and explain how the company will act on the findings.
Common Pitfalls to Avoid
- Over-reliance on averages: Just because a benefit is common doesn’t mean it’s right for your workforce.
- Ignoring subgroups: What works for one department or demographic may not suit others.
- Under-communicating: If survey results lead to no visible change, employees may become disengaged from future feedback efforts.
- Analysis paralysis: Data without action is wasted effort. Prioritize and pilot new initiatives when needed.
Conclusion
Benefits Surveys are more than a compliance exercise or checkbox—they are strategic tools that help companies remain competitive, responsive, and aligned with workforce needs. By combining external benchmarking with internal feedback, organizations can craft a benefits strategy that drives employee satisfaction, supports business goals, and enhances the company’s value proposition in the talent market.
In today’s ever-changing world of work, listening to your employees and learning from the market are not just smart practices—they are essential.
by Mark Morgenfruh | Jun 11, 2025 | Workforce Dynamics
Are you actively managing all the forces that impact your labor supply? Do you know the ones you have no control over? What are your long-term workforce-planning strategies to ensure you have all the talent you need to achieve your organization goals today, and in three years? We help every business in America
The Forces Acting on Labor Markets: A Comprehensive Analysis
The labor market is a complex and dynamic system influenced by a wide range of internal and external forces. It is where the supply of labor (workers) meets the demand for labor (employers), and the outcomes—such as employment rates, wages, and working conditions—are shaped by shifting forces across economics, demographics, public policy, globalization, technology, and societal expectations.
Understanding the forces acting on labor markets is essential for business leaders, policymakers, human resource professionals, economists, and workers alike. These forces determine not only the availability and quality of jobs but also influence how labor markets adapt to long-term trends such as automation, remote work, and aging populations.
This article explores the key forces influencing modern labor markets, illustrating how they interact and shape employment landscapes in both predictable and unexpected ways.
- Economic Forces
At the core of any labor market analysis are economic principles such as supply and demand, productivity, and business cycles.
- Supply and Demand of Labor
Labor supply refers to the number of people willing and able to work at a given wage, while labor demand refers to the number of workers businesses are willing to hire. These are influenced by:
- Wages: Higher wages can attract more workers but reduce the number of jobs employers are willing to offer.
- Skills and education: A mismatch between the skills employers need and the skills workers possess can cause labor shortages or surpluses.
- Participation rates: Factors such as childcare, retirement decisions, and immigration affect how many people are in the labor force.
- Business Cycles
During periods of economic expansion, businesses hire more workers, leading to lower unemployment and rising wages. In recessions, the opposite occurs: firms cut costs by laying off workers, reducing hours, or freezing wages.
- Inflation and Interest Rates
Inflation affects real wages (purchasing power), while interest rates, controlled by central banks, influence business investment. Higher interest rates can reduce job creation by making borrowing more expensive for businesses.
- Technological Forces
Technology is perhaps the most transformative force acting on labor markets today.
- Automation and Artificial Intelligence
Advancements in automation and AI are displacing some types of labor while creating new roles that require different skill sets. For example:
- Manufacturing: Robotics has replaced many manual tasks.
- Customer service: AI chatbots now handle many routine inquiries.
- Healthcare and finance: Data analytics and algorithms assist professionals but also change the nature of the work.
While some fear job losses due to automation, history shows that technological change also spurs job creation in new industries. The challenge lies in ensuring the workforce can transition to these emerging opportunities.
- Remote Work and Digital Platforms
Technology has enabled remote and gig-based work, decentralizing the labor market and expanding employment possibilities beyond traditional full-time jobs. Platforms like Upwork, Uber, and Fiverr have introduced new models of labor engagement.
This trend challenges traditional labor protections and raises questions about benefits, job security, and fair compensation.
- Demographic Forces
Demographic trends shape the composition, size, and behavior of the labor force over time.
- Aging Population
Many developed nations are experiencing an aging workforce. As baby boomers retire, there is a shortage of experienced workers, particularly in sectors like healthcare and skilled trades.
This trend also increases the dependency ratio, putting pressure on social safety nets like pensions and Medicare.
- Youth Employment and Education
Conversely, younger workers often struggle to enter the labor market, especially in periods of economic instability. Education systems must adapt to prepare students for rapidly changing industries.
- Immigration
Immigration helps offset labor shortages and adds diversity to the workforce. However, it can also create political and social tensions, especially when wages or job availability are perceived to be affected.
Immigrants often fill critical roles in agriculture, healthcare, and service sectors, contributing to both low- and high-skilled labor pools.
- Regulatory and Legal Forces
Labor markets are significantly shaped by government policies and regulations aimed at ensuring fairness, safety, and economic stability.
- Minimum Wage Laws
Federal and state minimum wage laws set the floor for compensation. These laws aim to protect workers but may also affect employer hiring decisions, particularly for low-margin businesses.
- Labor Rights and Unionization
Labor laws govern working conditions, hours, benefits, and collective bargaining rights. Unionization rates have declined in many countries, but unions continue to influence wage negotiations, workplace safety, and benefits.
In some sectors, such as education, public safety, and manufacturing, unions remain a powerful force.
- Employment Discrimination Laws
Laws such as Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act prohibit unfair labor practices based on race, gender, age, disability, and other protected characteristics. These laws impact hiring, compensation, promotions, and terminations.
- Healthcare and Benefits Regulation
Employer mandates on health insurance, paid leave, and retirement benefits influence labor costs and employment decisions. The Affordable Care Act (ACA), for instance, changed how many U.S. companies provide health coverage and employ part-time workers.
- Globalization
The labor market is no longer confined by national borders. Global economic integration impacts wages, job availability, and skill demands.
- Outsourcing and Offshoring
Many businesses move operations overseas to reduce labor costs. While this can lead to lower consumer prices and business growth, it can also result in job losses in domestic manufacturing and service sectors.
- Global Labor Supply and Competition
Workers in developing countries often compete with those in developed nations, particularly in digital and service-based roles. For example, software development, call centers, and graphic design are commonly outsourced to countries with lower labor costs.
- Trade Agreements and Tariffs
International trade policies affect labor markets by influencing the flow of goods and services. Tariffs can protect domestic jobs in the short term but may lead to retaliatory measures and higher consumer prices.
- Educational and Skill-Based Forces
Education and training are crucial in shaping labor market outcomes.
- Skills Gap
A major challenge today is the skills gap—the mismatch between what employers need and what job seekers offer. Many jobs in healthcare, IT, and skilled trades go unfilled due to a shortage of qualified candidates.
- STEM and Lifelong Learning
A growing emphasis is placed on science, technology, engineering, and mathematics (STEM) education. In addition, the need for continuous learning and upskilling has become essential in a world where job requirements change rapidly.
- Credential Inflation
As more people obtain college degrees, employers sometimes increase credential requirements for jobs that may not have needed them in the past. This phenomenon can limit job access and drive unnecessary education expenses.
- Social and Cultural Forces
Societal attitudes and cultural values influence how labor markets evolve, including who participates and how work is perceived.
- Work-Life Balance and Well-Being
Workers increasingly prioritize work-life balance, mental health, and meaningful work. Employers that fail to address these priorities may struggle to attract and retain talent.
- Diversity, Equity, and Inclusion (DEI)
The push for more equitable workplaces has led to changes in hiring practices, pay equity audits, and inclusive leadership development. These initiatives influence labor market outcomes, particularly for historically marginalized groups.
- Generational Differences
Millennials and Gen Z workers often value flexibility, purpose, and digital engagement more than previous generations. Their preferences are reshaping workplace culture and labor market dynamics.
- Shocks and Disruptions
Unexpected events can have major short-term and long-term impacts on labor markets.
- Pandemics (e.g., COVID-19)
COVID-19 triggered a massive labor market shock, leading to record unemployment, labor shortages, and the normalization of remote work. It forced rapid changes in business models and workforce management.
- Natural Disasters and Climate Change
Events such as hurricanes, wildfires, and droughts can disrupt labor markets locally and globally by affecting supply chains, infrastructure, and workforce mobility.
- Geopolitical Conflicts
Wars, terrorism, and political instability displace workers, disrupt labor migration, and alter energy and commodity markets—all of which can impact employment conditions.
Conclusion
The labor market is influenced by a vast network of interrelated forces. Economic trends, demographic shifts, technological innovation, public policy, education, globalization, and social values all play a role in shaping how work is performed, who performs it, and under what conditions.
No single force acts in isolation. For example, technological changes may increase productivity but also require regulatory updates and workforce reskilling. Similarly, demographic changes like an aging population create new healthcare jobs while straining public resources.
To navigate these forces effectively, governments, businesses, and individuals must adopt a forward-thinking and adaptable approach. Policymakers need to create flexible labor regulations that support both worker protection and business innovation. Employers must stay attuned to labor market signals and invest in workforce development. And workers themselves must embrace continuous learning and adaptability.
In a world of accelerating change, understanding the forces acting on labor markets is essential for building a resilient, inclusive, and prosperous future of work.
by Mark Morgenfruh | Jun 11, 2025 | HR Audits
If my company is interest in an HR Audit, what are some of the areas that we’ll cover? We help every business in America
Components of Human Resources Audits
Human resources audits serve as comprehensive evaluations of an organization’s HR practices, policies, and procedures. These systematic reviews help organizations identify areas of strength, uncover potential risks, ensure compliance with legal requirements, and optimize HR operations for better business outcomes. Understanding the various components of HR audits is essential for organizations seeking to maintain effective people management practices and mitigate legal and operational risks.
Legal Compliance and Documentation Review
The foundation of any HR audit begins with a thorough examination of legal compliance across all employment-related areas. This component involves reviewing the organization’s adherence to federal, state, and local employment laws, including the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and various wage and hour regulations.
Auditors examine employee files to ensure proper documentation exists for all personnel actions, including hiring decisions, performance evaluations, disciplinary actions, and terminations. This review includes verifying that I-9 forms are properly completed and maintained, background checks are conducted appropriately, and all required notices are posted in workplace locations. The documentation review also encompasses examining job descriptions for accuracy and compliance with equal employment opportunity requirements, ensuring they reflect actual job duties and contain appropriate essential functions.
Employment contracts, offer letters, and separation agreements undergo scrutiny to confirm they contain necessary legal protections while avoiding potentially problematic language. The audit process includes reviewing non-disclosure agreements, non-compete clauses, and arbitration agreements to ensure they are enforceable and compliant with current legal standards.
Recruitment and Selection Processes
The recruitment and selection component evaluates how effectively and fairly the organization attracts, evaluates, and hires talent. Auditors examine job posting practices, interview procedures, and selection criteria to identify potential bias or discriminatory practices. This includes reviewing the diversity of recruitment sources, the consistency of interview questions across candidates, and the documentation of hiring decisions.
Background check procedures, reference verification processes, and pre-employment testing protocols are assessed for compliance with legal requirements and best practices. The audit examines whether selection criteria are job-related and consistently applied, and whether reasonable accommodations are appropriately considered during the hiring process.
Onboarding processes also fall under this component, including the effectiveness of new employee orientation programs, the completion of required paperwork, and the provision of necessary training and resources. Auditors evaluate whether new hires receive adequate information about company policies, procedures, and expectations during their initial employment period.
Compensation and Benefits Administration
Compensation audits examine pay equity, wage and hour compliance, and the overall effectiveness of the organization’s compensation philosophy. This component includes analyzing pay scales across different positions, departments, and demographic groups to identify potential disparities that could indicate discrimination or market misalignment.
The review encompasses overtime calculations, exempt versus non-exempt classifications, and compliance with minimum wage requirements. Auditors examine time-keeping systems, break and meal period policies, and the proper handling of compensatory time arrangements. Benefits administration undergoes evaluation to ensure proper enrollment procedures, accurate deductions, and compliance with regulations such as COBRA, HIPAA, and the Affordable Care Act.
Stock option plans, bonus programs, and other incentive compensation arrangements are reviewed for proper documentation, tax compliance, and adherence to established criteria. The audit also examines expense reimbursement policies and procedures to ensure they are reasonable and consistently applied.
Performance Management and Employee Development
This component evaluates the effectiveness of performance evaluation systems, goal-setting processes, and professional development programs. Auditors review performance appraisal documentation to ensure evaluations are conducted regularly, consistently, and fairly across all employee groups. The review includes examining whether performance standards are clearly communicated, measurable, and aligned with organizational objectives.
Training and development programs undergo assessment to determine their effectiveness in meeting both organizational needs and employee career development goals. This includes reviewing training records, evaluating the quality and relevance of educational offerings, and assessing whether all employees have equal access to development opportunities.
Succession planning processes are examined to ensure the organization has adequate plans for key position continuity and leadership development. The audit evaluates whether high-potential employees are identified and developed appropriately, and whether knowledge transfer mechanisms exist for critical roles.
Employee Relations and Workplace Policies
The employee relations component focuses on the organization’s policies and procedures for managing workplace relationships, conflicts, and disciplinary actions. Auditors review employee handbooks and policy manuals to ensure they are current, comprehensive, and legally compliant. This includes examining policies related to harassment prevention, workplace safety, social media usage, and confidentiality.
Grievance and complaint procedures are evaluated for effectiveness and fairness, including whether employees have multiple avenues for reporting concerns and whether investigations are conducted promptly and thoroughly. The audit examines disciplinary action records to ensure consistency in application and appropriate documentation.
Workplace culture and employee engagement metrics are assessed through survey data, exit interview information, and other feedback mechanisms. The review includes evaluating communication channels between management and employees, recognition programs, and initiatives designed to promote positive workplace relationships.
Health and Safety
This component examines the organization’s compliance with occupational health and safety regulations, including OSHA requirements where applicable. Auditors review safety training records, incident reports, and emergency response procedures to ensure adequate workplace protection measures are in place.
Workplace safety committee activities are reviewed to determine their effectiveness in preventing workplace injuries and illnesses.
Technology and Data Management
Modern HR audits increasingly focus on Human Capital Management (HCM) systems. These systems have moved far beyond payroll processing and employee recordkeeping. The features and functionality, as well as people analytics, have advanced businesses beyond basic HR tech to centralizing all employee activities and engaging staff throughout all stages of their career.
Total Rewards Programs
Health and Welfare benefit programs, as well as retirement plans are crucial to employee engagement. They are also highly regulated with a great deal of compliance requirements.
Conclusion
Human resources audits provide organizations with valuable insights into their people management practices while helping ensure compliance with complex employment regulations. By systematically examining these various components, organizations can identify areas for improvement, mitigate legal risks, and optimize their human capital investments for sustained business success.
by Mark Morgenfruh | Jun 10, 2025 | HR Leadership
Every manager faces this moment: you need to address a performance problem with an employee, but you’re dreading the conversation. Maybe they’re a long-term employee whose performance has declined, or perhaps a newer hire isn’t meeting expectations. Regardless of the situation, avoiding difficult conversations only makes problems worse and puts your business at risk.
Why Managers Avoid Performance Conversations
It’s natural to want to avoid uncomfortable situations. Common reasons managers delay performance discussions include:
- Fear of conflict and emotional reactions
- Uncertainty about what to say or how to structure the conversation
- Concern about legal implications if the conversation goes poorly
- Hope that the problem will resolve itself without intervention
- Lack of documentation to support their concerns
- Previous negative experiences with similar conversations
However, postponing these discussions creates bigger problems. Performance issues rarely improve without intervention, and delayed action can lead to team resentment, decreased productivity, and potential legal complications if termination becomes necessary.
The Framework for Effective Performance Conversations
Prepare Thoroughly Before the Meeting
Success starts with preparation. Gather specific examples of performance issues, including dates, situations, and impacts on the business or team. Review the employee’s job description, previous performance reviews, and any relevant company policies.
Avoid vague complaints like “attitude problems” or “not being a team player.” Instead, focus on observable behaviors and measurable outcomes. For example, “missed three project deadlines in the past month” or “received customer complaints about response time on four occasions.”
Choose the Right Setting and Timing
Schedule the conversation for a private location where you won’t be interrupted. Avoid Fridays or right before holidays when emotions may be heightened. Give yourself adequate time—rushing through a performance conversation sends the wrong message and often leads to incomplete discussions.
Start with Clear Intent
Begin the conversation by stating its purpose clearly and directly. For example: “I’ve scheduled this meeting to discuss some concerns about your recent performance and work together on an improvement plan.”
This approach eliminates confusion and helps the employee understand the seriousness of the situation while positioning the conversation as collaborative rather than punitive.
The GROW Model for Performance Discussions
Goal: Define What Success Looks Like
Clearly articulate your expectations and the specific improvements needed. Be concrete about standards, deadlines, and measurable outcomes. Instead of saying “improve your attitude,” explain “I need you to respond to customer emails within four hours and maintain a professional tone in all communications.”
Reality: Address the Current Situation
Present the facts objectively, focusing on behaviors and results rather than personality traits. Use the specific examples you prepared, and allow the employee to share their perspective. Listen actively—there may be circumstances you’re unaware of that are contributing to the performance issues.
Options: Explore Solutions Together
Work collaboratively to identify potential solutions and improvements. Ask questions like “What do you think would help you meet these deadlines?” or “What obstacles are preventing you from achieving these goals?” This approach increases buy-in and helps identify practical solutions.
Way Forward: Create an Action Plan
Develop a clear improvement plan with specific goals, timelines, and checkpoints. Document what support you’ll provide, what resources are available, and how progress will be measured. Set dates for follow-up meetings to review progress.
Handling Different Types of Performance Issues
Skill-Based Problems
When an employee lacks necessary skills, focus on training and development opportunities. Create a learning plan with specific milestones and provide appropriate resources. Consider mentoring, additional training, or modified responsibilities while skills develop.
Motivation or Engagement Issues
These conversations require deeper exploration of underlying causes. Ask about workload, career goals, work environment concerns, or personal challenges that might be affecting performance. Sometimes simple adjustments can dramatically improve engagement.
Behavioral Problems
Address behavioral issues quickly and directly. Explain the specific behaviors that need to change, the impact on the team or customers, and the consequences of continued problems. Reference company policies and ensure the employee understands expectations.
Attendance and Punctuality
Document patterns of attendance issues and address them promptly. Discuss the impact on team productivity and customer service. Be aware of potential FMLA or ADA implications if health issues may be involved.
Common Mistakes to Avoid
The “Compliment Sandwich”
Starting with praise, delivering criticism, then ending with more praise often confuses the message. Employees may focus on the positive comments and miss the serious nature of performance concerns.
Being Too Vague
Phrases like “you need to improve” or “do better” don’t provide actionable guidance. Be specific about what needs to change and how success will be measured.
Making it Personal
Focus on behaviors and results, not personality traits or character judgments. Avoid words like “always” or “never,” which can trigger defensive responses.
Failing to Document
Always document performance conversations, including what was discussed, agreements reached, and follow-up plans. This documentation protects both you and the employee and provides continuity if issues continue.
Managing Emotional Reactions
When Employees Become Defensive
Remain calm and acknowledge their feelings while redirecting to facts. You might say, “I understand this is difficult to hear. Let’s focus on specific examples and how we can work together to improve the situation.”
When Emotions Run High
If an employee becomes very upset, consider taking a brief break. Offer tissues, water, or a few minutes to compose themselves. Remember that emotional reactions are often signs that the feedback is being heard.
When Employees Disagree
Listen to their perspective and acknowledge valid points while maintaining your position on performance standards. You might say, “I appreciate your viewpoint, and I understand you see the situation differently. However, the expectations remain the same.”
Following Up and Following Through
The conversation is just the beginning. Schedule regular check-ins to review progress and provide ongoing feedback. Recognize improvements when they occur, but also address continued issues promptly.
If improvement doesn’t occur within the agreed timeframe, be prepared to escalate to more serious consequences, including possible termination. Consistency in following through on commitments is crucial for maintaining credibility and legal compliance.
Building a Culture of Continuous Feedback
The best performance conversations are part of an ongoing dialogue, not isolated events. Regular one-on-one meetings, informal check-ins, and immediate feedback create an environment where performance issues can be addressed before they become serious problems.
Encourage a two-way feedback culture where employees feel comfortable discussing challenges, asking for help, and sharing ideas for improvement. This proactive approach prevents many performance issues from escalating to formal disciplinary action.
When to Seek Additional Support
Consider involving HR or seeking external guidance when:
- Performance issues involve potential legal risks
- An employee raises discrimination or harassment concerns
- You’re unsure about company policies or procedures
- Previous attempts at improvement have failed
- The situation involves complex interpersonal dynamics
Key Takeaways
Effective performance conversations require preparation, clear communication, and consistent follow-through. While these discussions may be uncomfortable, they’re essential for maintaining team productivity, ensuring fairness, and protecting your business.
Remember that most employees want to succeed and will respond positively to clear expectations and support. By approaching performance issues with empathy, specificity, and professionalism, you can often turn struggling employees into strong contributors while maintaining team morale and business standards.
The goal isn’t to catch employees failing—it’s to help them succeed while protecting your business and maintaining fairness for all team members.
Need help developing your performance management skills or creating effective improvement plans? Our HR experts can provide training, templates, and ongoing support to help you handle difficult conversations with confidence and compliance.
