Dear Joan:

I am a manager of 12 employees at a very large company. I recently completed the annual review process with my employees. There are three categories to use when rating performance. Those in the upper category receive a larger raise, and those in the bottom category receive no raise.

Upper management decided that this how we are going to do things this year, and we are now forced to put someone in the bottom category. The problem is that I had already completed my reviews when I learned of the new policy. I would definitely have approached the reviews differently had I known this ahead of time.

Now I am being forced to tell someone they are in the bottom category, after the fact. This is a difficult situation. My group has been cut by 25% over the last few years, and I have a team that is firing on all cylinders.

I have had difficult discussions with employees, but it is fine when it’s warranted. I am having a very hard time developing an approach when the difficult discussion is being held simply to satisfy a corporate policy. Can you help with some suggestions?

Answer:

This is a great example of top-down initiatives that aren’t thought through. It’s easy to sit at the top and cook up a new policy—in this case a way to force leaders to be more honest in their performance appraisals—but the devil is in the details. They should have announced it this year at performance review time, so people would know what is coming next year and prepare for it. At the very least, you should have been told long before you had started doing your performance reviews. Now you are going to be “penalized" for doing your reviews on time and you’ve had no advance warning to give to employees. There are going to be some angry employees and angry managers.

But let’s back up a minute. Many organizations struggle with the issue of managers rating employees higher than they should be, and in a big organization like yours, it’s easy to just give everyone a substantial raise, without much distinction between performance levels. The reasons are logical: over time, employees learn their jobs and typically perform better year after year. If there isn’t a lot of turnover, the group should become a well-oiled team with high performance overall. But if the manager is afraid of conflict and isn’t addressing sagging or poor performance—which happens all too often—executives start to see raises creeping higher and higher across the board. “There aren’t this many star performers,” they reason. “And our payouts for salary increases are growing year after year.” So, to stop this they mandate a forced ranking.

So now you are stuck in a no-win position. If you blame upper management, you look like you aren’t supporting the management team and you could appear weak. If you go back to your employee and surprise him or her, you have a demotivated, resentful employee on your hands (as well as the rest of your employees, too, if they hear about it.)

You have limited options. One thing you could try is to appeal to your manager to delay implementing this new policy in your department for one year, since you already gave the performance review. There is a slim chance that others have been complaining about it, too, and the rising dissatisfaction with the policy could cause senior management to delay it or even re-think it.

If that is out of the question, you have no other option than to be honest—while trying not to bad-mouth the company. Be straightforward with the employee about exactly what happened and how it affects the person. You can say, “I am in a very uncomfortable position about a new policy the company just launched. I didn’t know about it when you and I met for your performance review. The company is asking every manager to spread out their employees’ ratings on a bell curve and divide that curve into three categories: no raise, average raise and an above average raise. The good news is that in our department all six of you are good performers and because we are down by 25% staff, you are all working harder than ever. But that doesn’t help us when we apply this new policy. Our department’s bell curve is skewed to the high end of the curve and relative to the other people in the department that means you fall into the no raise category.”

There will be protests and anger. All you can say in defense is that the company wants to force tougher salary increase standards, there are people in every team who are not getting a raise, and you will work with the person in the coming year to bring them up to a level where they can qualify for a raise. There may be other reasons the company is doing this—the economic downturn, for example—that may be relevant information to share with the employee.

You may want to give this response to your manager and see what kind of reaction you get. If your manager objects, ask for his or her recommendation about how to approach this. I doubt your manager will be able to pull a workable approach out of the hat…and that may cause him or her to voice concerns about the new policy.

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Joan Lloyd is an executive coach, management consultant, facilitator and professional trainer. Email your question to Joan at info@joanlloyd.com. Visit www.JoanLloyd.com to search an archive of more than 1400 of Joan’s articles. (800) 348-1944 © Joan Lloyd & Associates, Inc.

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