Talking Pay Across Generations – How to Navigate Compensation Conversations at Work
- employersadvantage
- Sep 24
- 4 min read
Updated: Sep 26
For small business owners, compensation conversations at work are rarely simple. Pay is personal, tied to motivation, and one of the clearest signals of how much an employee is valued. In today’s workplace, those conversations are even more complex because they span a multigenerational team.
In today’s workplace, those conversations are even more complex because they span a multigenerational workforce. Some employees, often seasoned in their careers, may hesitate to advocate for themselves. Others, especially those newer to the workforce, may push for more rapid increases without always knowing how to frame their case.
Both perspectives are understandable, and both highlight the need for a thoughtful, fair process that balances consistency with nuance and communicates that clearly across the organization.
The goal is to turn that process into a clear, repeatable message that builds trust and supports equity. With the right approach, you can communicate about raises and merit in a way that builds trust and supports equity.
Step 1: Establish a Compensation Philosophy
Before you have compensation conversations at work, you need to know what your organization stands for when it comes to pay. A compensation philosophy is a guiding statement that answers questions like:
Do you want to lead, match, or lag the market?
How do we balance performance, tenure, and competitiveness?
Can we sustain this approach to pay year after year, not only when revenue is high?
Having this framework creates consistency, reduces misunderstandings, and ensures decisions are made with the bigger picture in mind. Just as importantly, it empowers managers to have confident, fair conversations with their teams while freeing the owner from being the sole decision-maker on every pay question.
Step 2: Do Market Research
The second foundation is market data. Employees, especially younger ones, have easy access to salary information online, which means they’ll compare what they make to what they see on sites like Glassdoor or LinkedIn. Regularly reviewing compensation surveys or benchmark reports for your industry ensures you stay competitive and credible when explaining your decisions.
Market research also gives context: most merit increases in the U.S. average around 3–5% annually. Larger jumps are the exception, not the rule. Being able to share that data helps set realistic expectations.
Step 3: Communicate with Clarity and Consistency
With your philosophy and benchmarks in place, the focus shifts to communication. Clear, repeatable messaging is how you earn trust and avoid misunderstandings.
Before Performance Reviews
“Our approach to raises is based on three things: individual performance, market data, and company health.”
“Merit increases reflect sustained results, not just time served.”
“We know some employees are less likely to ask for raises, while others are quick to advocate. Our process is designed to keep things fair for everyone.”
During Pay Conversations
Lead with recognition: start by acknowledging impact and contributions.
Explain the decision-making: share how company performance, market ranges, and individual results are all factored in.
Provide context: “Most raises fall in the 3–5% range. Larger increases happen with exceptional performance or when a role changes significantly.”
Balance across generations: “Some people push for rapid growth; others are quieter about their worth. Both perspectives matter, and we want to support both fairly.”
Ongoing Reinforcement
Share reminders in newsletters, meetings, or Slack:
“Raises are tied to performance, company sustainability, and market data.”
“Exceptional raises happen, but fairness across the team is always the goal.”
Give managers tools to check in proactively with long-tenured employees who may not ask for raises themselves.
Offer coaching for newer employees on how to advocate effectively so their requests are rooted in performance and realistic market expectations.
Why This Matters in a Multigenerational Workforce
Generational myths can cloud judgment. It’s common to hear that Gen Z is “demanding” when it comes to raises, or that Baby Boomers are “too modest to ask for more.” Both extremes miss the point. Research from McKinsey shows workers across all generations share the same core motivations: fair compensation, meaningful work, flexibility, career growth, and supportive leadership.
The real difference is in how people express their needs. Veteran employees may hold back from advocating for themselves, while greener employees may push without always knowing how to frame the conversation productively. Small business owners can bridge that gap by encouraging quieter employees to speak up and teaching newer employees how to advocate effectively. Common Questions we get asked:
Q: What is a compensation philosophy?
A compensation philosophy is a guiding framework that outlines how your company approaches pay. It helps determine whether you lead, match, or lag market rates and ensures consistency in how raises are awarded.
Q: How do you handle pay expectations from different generations?
Each generation may express compensation needs differently. The key is using a transparent, consistent process that values both quiet contributors and vocal advocates equally.
Q: What’s a typical merit increase in the U.S.?
Most merit-based raises in the U.S. fall between 3–5% annually. Larger increases typically occur during promotions or significant role changes.
Final Takeaway
Pay conversations don’t have to be overwhelming. By:
Establishing a clear compensation philosophy,
Doing regular market research, and
Communicating consistently and inclusively,
…you create a fair, transparent process that resonates across generations.
When employees understand how decisions are made, and when they see both performance and sustainability taken into account, you build trust, retain talent, and create a stronger workplace culture.
