Effective employee communication on how compensation works is a must.
It builds trust and understanding in how decisions are made about their compensation package and what future pay progression will look like for them.
Ultimately this supports Rewards objectives on employee engagement and retention.
In fact, dissatisfaction with compensation is a top driver for employees leaving their jobs – and this is inevitably exacerbated when they lack understanding about how compensation decisions are made.
Plus, with pay transparency regulations ramping up, clear and transparent communication about compensation approach is becoming a compliance necessity too.
But, compensation communication plans are notoriously hard to get right.
So, we’ve enlisted the help of Eamonn Stanley (Head of Reward at Typeform) and Vaso Parisinou (Chief People Officer at Ravio) to figure out how to design an effective employee education programme on compensation and benefits.
At Ravio we talk to Reward Leaders all the time, and communicating about compensation with employees effectively consistently comes up as one of the most challenging aspects of the job.
From our conversations, the biggest challenges are:
We asked Reward Leaders what the biggest challenge is in their own organisation (Ravio Reward Hour, February 2025).
The outcome was mixed, but clarity on the compensation approach, employee and line manager understanding of compensation, and the sensitive nature of the topic, came out as the top results.
We asked Eamonn Stanley (Head of Reward at Typeform) and Vaso Parisinou (Chief People Officer at Ravio) for their advice on how to overcome these challenges to design a compensation communication plan that will ensure strong understanding across the entire team.
They shared six tips:
Let’s take a closer look at each.
For Eamonn, scoping out the team’s existing understanding of how compensation works is an important starting point.
“The level of understanding on compensation usually differs within an organisation,” he says. “Some employees have a good understanding and some don’t, and the same goes for line managers too. So the first step should always be to gauge where the team is at.”
Having this information then enables you to build a compensation communication plan or education programme that is tailored to the needs of your specific team.
With all the new concepts to share and complexities to explain, knowing where to start can be the first stumbling block.
Both Eamonn and Vaso advise first introducing employees to the compensation philosophy.
“Start with your compensation philosophy,” says Vaso, “and frame it in terms of explaining why the company makes compensation decisions in the way that it does.”
For Eamonn, starting with the compensation philosophy helps to “distill all the complexities down into a set of core principles”.
A lot of the complexity arises because of the nuances in how compensation varies across different roles, departments, locations, and so on – but the core philosophical principles that sit behind that nuance always stay the same.
Introducing those principles first, in Eamonn’s experience, “helps people to intuitively understand how it actually works.”
Having those core principles in place, and communicating them to the team, also brings structure into play. That structure is vital to ensure employees feel confident that compensation decisions are being made logically, consistently, and fairly – and makes it much easier to explain compensation changes during pay review season.
"Starting with the compensation philosophy helps to distil it down into the core principles, making it much easier for employees to build an intuitive understanding of how compensation actually works."
Head of Reward at Typeform
Having worked in several early-stage startups, Vaso has first-hand experience of what happens when that structure isn’t there.
“You end up with a lot of confused employees who feel like their compensation doesn’t make any sense and is unfair,” she says, “and it becomes a distraction for everyone."
"It becomes an urgent pain for employees, meaning that line managers are dealing with noise and difficult conversations, leaning on an overstretched People team for support, who are looking to leadership for strategic direction.”
“Plus, when you do eventually introduce structured principles, there’s then a huge amount of change management needed to implement them effectively.”
With the principles as the foundation, it’s then important to build employee understanding with an incremental approach and lots of touchpoints along the way.
“Use the compensation philosophy as the first building block, to then expand on with more and more building blocks over time”, says Eamonn.
And Vaso agrees. “When you try to cover all the complexities from the start it puts pressure on your team, and will only overwhelm employees with too much information to take in – adding to the pressure.”
Instead, she recommends “Start slowly and build from there with frequent and incremental communications. Everything else aside, I’ve found this approach to be much more manageable for myself and my team!”
"Start with the foundations, and build slowly from there, frequently and incrementally. That goes for both the compensation approach itself, and how you communicate it to employes."
Chief People Officer
Vaso also points out that a company’s compensation approach also typically adapts and builds over time. “The same is true for the compensation structure itself,” she says, “starting with the principles and building slowly from there is the best approach.”
This then helps to shape the compensation communication plan, because each time one of those building blocks is defined, it’s time to communicate it to the wider team.
To take an example, Vaso recently presented the company’s compensation philosophy to the full team as part of our annual onsite. Equity compensation was only lightly touched on, because changes are planned this year in this area, so further education will follow later in the year on this.
This is something that Eamonn has found important at Typeform too. In early 2025 he rolled out transparent salary bands internally. It’s been a major project and represents a huge change in how compensation is handled within a company, so could easily have been a very challenging launch with lots of employee questions and concerns.
But Eamonn had already been sharing openly with the team about why it was happening (which includes responding to employee feedback on the subject) and the process his team was going through – which meant only positive reactions when sharing the end product.
“It’s about bringing employees along on the journey with you,” says Eamonn. “Don’t just share the final destination, share how you’re getting there.”
"Bring employees along the Rewards journey with you. Don’t just share the final destination, share how you’re getting there.”
Head of Reward at Typeform
An incremental approach naturally means that lots of different comms touchpoints are needed over time to ensure employees have a full understanding of how compensation works, and all of those building blocks that are added over time.
For Eamonn, it’s all about consistency. “Communicating about compensation once a year simply doesn’t work,” he says, “consistent education is needed.”
When it comes to deciding what the right touchpoints are, Eamonn focuses on defining “the key moments within your company’s Rewards processes” because “those moments are the most important time to be communicating with employees about compensation.”
At Typeform, for instance, Eamonn runs two merit cycles per year. After each cycle, he always makes sure to clearly communicate with the whole team an overview of the decisions made during that cycle (typical salary increase, promotions, etc) and why those decisions were made in the context of those core principles from the compensation philosophy.
Vaso also highlights the importance of documentation, creating educational resources that are available to employees at all times within the company’s employee handbook or Notion system, rather than relying on one-off communications.
This might include a written version of the compensation philosophy, or a recording of an all-hands session on the company’s approach to compensation reviews, and so on.
“The goal is that employees understand the key concepts used in Rewards and how decisions are made for their compensation,” she says, “If they don’t understand, then the next best scenario is that they’re able to locate the information in one clear place so that they can self-serve where possible, and learn where to go or who to reach out to next.”
"Consistency is key. Communicating about the compensation approach once per year doesn’t work, many touchpoints are needed.”
Head of Reward at Typeform
Compensation will always be a sensitive topic for employees, and it needs to be handled as such – ‘how’ you communicate matters just as much as ‘what’ you’re communicating.
Eamonn advises that when communicating with employees about compensation, whether it’s company-wide education or a 1-2-1 catch up, to “lead with empathy”.
This is especially important as companies become more open and transparent about how compensation works, because as Eamonn puts it “transparency without empathy can backfire.”
That transparency might lead to more questions and concerns about the fairness of decisions simply because they’re out in the open, so it’s important to keep handling those conversations with care (and supporting line managers to do so too).
We’ve seen that compensation can be a complex subject matter, and it also feels highly personal for employees too – which can make it feel like more of a negative than a positive on the surface.
In reality, understanding how compensation works is actually also a valuable skill to have for employees.
“In the early stages of my career I didn’t work in the People function,” says Vaso, “so I had no idea how my own salary was determined or what my future pay progression might look like in my role. I found that moving into the Rewards space gave me more agency as an employee – and I know several members of the team at Ravio have found that too since working in the compensation and benefits space.”
Knowing how compensation works enables employees to advocate for themselves, both in terms of career progression within the company or in future hiring or salary negotiation processes.
"I’ve personally found that working in Rewards has drastically increased my agency as an employee when discussing my own compensation package and progression. Emphasise the importance of compensation knowledge as a career development skill."
Chief People Officer
That knowledge and skill is win-win, because as Vaso highlights “the entry-level folks of today will become the managers and leaders of tomorrow.”
Alongside company-wide communications by the Reward team, line managers play a huge role in communicating about compensation within their 1-2-1 conversations with direct reports.
“It sparks a trickle down effect,” says Vaso, “because those managers of tomorrow will be able to have more meaningful and effective conversations with their future direct reports because of their understanding of how compensation works.”
"Great employee communication and education on compensation has a trickle-down effect. The juniors of today become the managers and leaders of tomorrow, and if they have strong understanding they’ll naturally have more meaningful and empathetic conversations with their future direct reports.”
Chief People Officer
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Vaso Parisinou (CPO at Ravio), Eamonn Stanley (Head of Reward at Typeform), and Vicky Peakman (Pay Equity Consultant) discuss how to effectively communicate compensation to employees.
