Talking about money at work can feel awkward, but it doesn’t have to be. Whether you’re a manager doing pay reviews or an employee looking for an increase, learning how to have open, constructive conversations about pay is essential for a healthy, transparent workplace culture, and show that you value your staff.
Done well, good pay conversations build trust, boost engagement, and reduce turnover. Done poorly, they can lead to resentment, confusion, or even employment grievances. So how do you ensure these conversations hit the right note?
Why pay conversations matter more important than ever
In 2025, Kiwi businesses are navigating the ongoing cost-of-living pressures, rising wage expectations, and evolving employee values around fairness and transparency. With job hopping on the rise, remuneration remains a top reason people switch roles, getting pay conversations right should be a strategic priority.
There’s also a major legal shift underway. The Employment Relations (Employee Remuneration Disclosure) Amendment Bill has been passed through Parliament and makesit unlawful to penalise employees who discuss their own pay. This aligns New Zealand with global moves towards greater pay transparency seen in countries like Australia, Canada, the UK, and several US states and EU nations. With this law recently passed, transparency isn’t just a nice-to-have – it’s essential.
For managers, this means being prepared, clear, and confident. For employees, it means understanding your value presenting yourself with professionalism and value, it is not just an expectation. For both parties, it’s about evidencing value and a mutual understanding of this exchange.
Preparing for the Conversation: Manager Edition
Whether you’re running a formal pay review or responding to a one off salary review request, preparation is everything. Here’s how to get ready:
1. Ground Yourself in the ‘Why’
Understand your business’s remuneration strategy. Is your pay framework based on performance, market benchmarks, tenure, or a mix of all three? Be ready to explain how decisions are made and where your team member fits.
Learn more about how we support this through our Remuneration Strategy & Benchmarking.
2. Use Market Data Wisely
Don’t rely on generic “X role pays Y” statements. Use trusted benchmarks from NZ-specific data (seek.co.nz, Strategic Pay, recruitment reports and industry contacts if relevant), layer in internal equity considerations, the institutional knowledge of your team has value, don’t forget about that. If you’re working with us, we can help benchmark effectively, taking all of these considerations into decision making.
3. Practice Transparency
If there’s no room for movement right now, be honest — and explain why. Transparency goes further than avoidance, even when the message is hard. People understand that not each year will be the same, we promote as much transparency as reasonably practicable it helps people understand the business context better.
4. Consider the Whole Package
Sometimes salary isn’t the only lever. Employee benefits, flexibility, professional development opportunities, or wellbeing support may provide meaningful value to your people. Remind your staff if needed about these other factors – sometimes they forget and these have value too.
When Employees Bring It Up: A Manager’s Toolkit
It’s natural for employees to ask about their pay, and you should welcome the conversation. Here’s how to handle it well:
- Stay curious: Ask what’s prompted their question. A competitor offer? Cost of living? Feeling undervalued?
- Listen without defensiveness: A pay conversation is also a feedback opportunity.
- Don’t wing it: If you need time to review their request or check facts, say so, then follow up promptly. You are always better to take a bit of time to think or consider things than making a rash decision or statement you can’t back up.
- Be clear on the next steps: Will there be a review process? When can they expect an update?
- Document any changes: whether you give your team member an increase or not, ensure you follow up in writing, an email is fine. Explain what was discussed, your expectations, and what the outcome is.
And remember, consistency is key. If you say no to one person, but yes to another, make sure the rationale is fair and well-documented.
It’s also ok to say ‘’you’re not there yet, but let’s work on a plan to get you there in the next X months’ this provides your team member with a clear path to achieving their financial goals and you some time to see them step up/develop and prove themselves and then get rewarded for it.
If you are a business owner then its important to ensure you are budgeting for increases along with your other financial planning, that includes increases to reward top talent.
Advocating for Yourself: Employee Tips
1. Do Your Homework
Come prepared with examples of your achievements, impact to the business/team, and any market data that supports your case. Focus on how your contributions align with business goals.
2. Time It Well
Aim for a time when your manager isn’t swamped or in the middle of a crisis. Annual review periods, post-project milestones, or scheduled one-on-ones are ideal.
3. Be Professional and Solution-Focused
Rather than “I need more money,” try:
“I’d love to discuss how my contributions over the past year align with our goals, and where my remuneration sits in relation to that.”
This keeps the tone constructive and future-focused. It also shows you are tying your contribution to business outcomes rather than an attitude of ‘I want more’ with nothing to back it up, which doesn’t go down well with most managers/ employers.
4. Accept the Outcome Gracefully
If it’s a no, ask what you can work towards and when the conversation can be revisited. Document the discussion and keep the dialogue open.
Want to grow your negotiation and leadership capability? Check out our Leadership & Coaching Services.
Common Pitfalls to Avoid
For both sides, here’s what not to do:
- Avoiding the topic altogether: Silence breeds speculation and resentment
- Being vague or inconsistent: Clarity creates confidence, on both the employee and manager’s side.
- Overpromising: Never make pay commitments you can’t honour.
- Making it personal: Keep the conversation focused on value, not emotion, assumptions, or other team members.
While pay structures don’t need to be disclosed in full, the change in the Employee Remuneration Disclosure Amendment Bill means HR compliance and clarity around pay frameworks is essential. If your business needs help preparing for this, we’re here to support.
Final Thoughts
Pay conversations can feel awkward, but they don’t have to be. Done well, they deepen trust, clarify expectations, and strengthen retention and engagement
Whether you’re a manager needing to frame the message right, or an employee preparing to advocate for your worth, getting comfortable with pay discussions is a skill worth developing.