Communicating salary freezes: best practices from HR leaders

Whether at SMBs or Fortune 500 companies, there’s a lot that can go wrong when it comes to announcing salary freezes. Misinformation, panic, demotivation, bad press, and attrition are all things to fear. And unfortunately, HR and people leaders are most often the bearers of bad news. 

Here’s what a VP of Human Resources working in telecommunications had to say about the first time she communicated a salary freeze: 

“I was horrified to be honest. I had never done it and I thought it was going to be an absolute disaster. So I gave a lot of emotional energy when it happened.”

We sat down with some HR and people operations leaders to give you the tools you need to effectively communicate a salary freeze. 

It might be overwhelming to think of your game plan, but in reality, salary freezes are a temporary measure that can save costs and layoffs. It’s never easy, but can be done by following some best practices as shared by HR leaders. 

If you find yourself in the tough position of delivering the news of a salary freeze, fear not – we’ve got you covered with tried-and-true strategies.

What’s a salary freeze?

Salary freezes are pauses on salary increases, merit-based bonuses, and/or raises. They are typically implemented when companies are experiencing a financial strain. They can impact entire workforces, specific teams, or even specific roles. 

Salary freezes are meant to be a temporary measure. They help companies bounce back from economic loss without resorting to layoffs or larger cuts. 

No one likes hearing that they won’t be eligible for salary increases, especially given today’s rising cost of living. 

Communicating salary freezes poses a difficult challenge for HR and people operations leaders. But there are some best practices you can follow to share the news, manage reactions, keep your team motivated and mitigate possible harm. 

What are the best practices for communicating salary freezes?

Be strategic by equipping leaders to manage reactions

Before sending company-wide communications, first share the news with managers and people leaders. Create time for questions, especially if they are also affected by the salary freeze. 

Emphasize the importance of consistent messaging and provide leaders with help and training. They will refer to those things when answering big questions or fielding criticism from their direct reports. 

Offer your leaders educational opportunities as well as one-pagers and relevant documents. Managers and leaders will appreciate your support with skill-building related to managing conflicts. 

Encourage managers to redirect questions they can’t answer to the correct channels instead of sharing what they think they know.

This strategy limits misinformation and makes it easier to manage panic when sharing the news about a salary freeze. 

“We really went over with the managers what not to say, don't give erroneous information,” explains a Human Resources Consultant working in tech. “It’s so easy for everybody to just start … speculating. A worst practice is not to nip it in the bud as soon as you possibly can.”

Test your communication strategy with a small group

One of the experts we spoke to, the Vice President, HR at her organization, tested her communication strategy with a small group of employees before announcing the news company-wide 48 hours later. 

Consider speaking to a “focus group” of employees that represents the affected parties during a salary freeze. Encourage them to ask whatever questions they have. Even if you can’t answer them right away, you’ll get a better sense of what to expect when the news is shared with everyone. 

It was through the focus group that the VP thought to implement useful benefits and financial wellness resources to offset the lack of raises.

Consider different, inclusive ways to communicate

An HR Manager who works in manufacturing shared the diverse strategies he used when he was tasked with communicating salary freezes: 

“A lot of our folks that work in our production teams, they're not really tech savvy. They don't have emails. And so in that case I literally went to our physical sites and had meetings with employees.” 

This HR Manager also said that many of the employees spoke English as an additional language. 

With this in mind, he brought translators with him to site visits where he shared the news. He also created physical FAQ sheets in both English and Spanish. 

These simple but effective measures helped him ensure that he could answer all the affected employees’ questions. He cut down on confusion as some employees thought salary freezes meant they weren’t getting paid at all. 

Maintain morale by focusing on the big picture and consistently sharing more information 

Often, a salary freeze can help companies avoid layoffs and more severe cuts. However, it's easy to miss that point when you’ve just been told that you won’t be getting a raise for a while.

Situate the temporary freeze in the bigger picture of your organization. Provide data and examples of actionable steps that are being taken to end the freeze.

Provide regular updates on company progress to show employees you are taking the freeze seriously. 

“We would put notes in [our newsletter] to show that we were on track to rebuild,” says the Vice President, Human Resources based in Illinois. “And what we found is that we eliminated some of the negative talk tracks.”

Consistency and long-term communication plans are key for maintaining the health of your company culture during and after a salary freeze. 

You can also maintain morale by being reassuring and readily available to answer questions until the salary freeze is lifted. “Encourage employees to keep the communication lines open and tell them how much you value them,” suggests the HR Consultant from California. 

Lean on your networks and look out for your team 

Communicating bad news is sometimes just part of the job in HR, but it can be emotionally draining. 

Reach out to your networks to get support with not only how to communicate salary freezes, but also to commiserate and understand how you might be feeling. 

On the same note, don’t forget to factor in time for your HR team to process news of a salary freeze. 

“I thought about how my team is going to have to carry all this emotional weight and work with me,” says the Vice President of HR working in telecommunications. She was aware that her team was in a unique position. They were impacted by the freeze on a personal level, but also had to share news and field questions about it on an organizational level. “I made sure to take care of that team and … acknowledge that we're about to go through emotional work.” 

Emphasize other benefits and provide financial resources, like ZayZoon’s Earned Wage Access

We have a confession. We hid half of the quote we shared at the beginning of this blog. When we spoke to the Vice President, HR about her experience with communicating a salary freeze, she actually said:

“I was horrified to be honest. I had never done it and I thought it was going to be an absolute disaster. So I gave a lot of emotional energy when it happened. But it really wasn't that bad … and I'm really relieved for it.”

With the right research and resources, the VP successfully communicated a salary freeze empathetically, strategically, and effectively – and you can too.  

“[When considering] best practices … having non-financial benefits to give to the employees is a really big one,” says the Vice President, HR. She got creative and leveraged her organization's existing relationships with vendors. The vendors provided her with free high-value gifts, including TVs and Pelotons, to give out as performance bonuses at no cost. 

Don’t know where to begin with no-cost financial wellness resources for your employees? Look no further than ZayZoon. 

Offer ZayZoon’s Earned Wage Access for on-demand pay at no cost to you

Help ease the stress that you and your employees may be feeling during a salary freeze. Offer ZayZoon’s no-cost Earned Wage Access (EWA) as a financial resource. EWA allows employees to get access to their wages ahead of payday, making it a valuable option during times of financial uncertainty.

ZayZoon is 100% free for business to implement and it can help your organization cut down on costs. Businesses that offer ZayZoon have seen a 29 percent reduction in turnover. 

Use our Savings Calculator to find your team’s future savings in under a minute. 

Want to learn more and make every day feel like payday, even under a salary freeze? Book a demo with our team today.