It's time for annual pay increases. As in years past, your company has an allocated budget of 3% of your payroll for raises. While you get 3% for raises, you aren’t required to give everyone that amount. Your team overall has performed well this year. As you think about how you want to distribute the raises, two team members come to mind. Gemma has been an excellent performer. She has consistently exceeded your expectations with projects and has taken the initiative to seek additional work. You have often asked Gemma to orient and train new hires, as well as to handle difficult customer service issues. Then there’s Fran. Fran has not been so stellar. She has been on the job for a year and a half, and during her brief tenure she has had attendance problems and some performance deficiencies. Your efforts to coach Fran on her performance have not been well received.
However, with your limited raise resources, you have decided to give all of your employees a 3% raise.
Gemma is not happy about receiving the same percentage increase as her peers. Gemma knows others are not performing well. Fran is not happy either. They both agree with their peers that 3% is an unsatisfactory increase. Gemma is considering looking for another job where her performance will be appreciated. Fran continues to express her unhappiness to the rest of the team.
You could have actually given Gemma, the “outstanding” employee, 5%, which would be 2% more than the majority of your employees. That would have required you to give your lesser performers less than 3%. To differentiate performance in a meaningful way requires managers to have difficult conversations with all employees on a regular basis. Often, managers fail to reward the best employees because they don’t want to have the unpleasant conversations (feedback) with the least productive employees.
What could you have done differently to recognize Gemma?
What conversation would you have to have with Fran to give her a lesser increase?
How could you avoid having frustrated Gemma so much that she wants to find another job?
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When managers lack the courage to give honest feedback, everyone in the organization suffers.
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