How do great leaders tackle tough conversations?
If a company is well respected, and its products are solid, what causes employee frustration? When leadership or management avoids tough conversations like those surrounding compensation or performance. First Round Capital recently outlined the top three biggest offenders: withholding reasons for compensation decisions, startups who outgrow their cofounders, and employee underperformance. These issues are all important, and managers can reduce employee ire by addressing necessary conversations up front with candor, planning, and respect. The one that I’ve seen directly contribute the most to voluntary employee attrition is a lack of clarity regarding raises or promotions. Employees are left to wonder why they did not receive a compensation increase when others on the team did, and they may search for other opportunities.
Where is my raise?
When someone emerges from performance review season to discover that they didn’t receive a raise but their teammate did, this can cause friction between colleagues, especially people at similar levels or who began working at the company at similar times. The employee without the raise may assume politics or cronyism are at play, when the real answer could be that they were compensated above market rate due to an aggressive hiring strategy, and the market has not caught up with them yet.
It’s best to address this ahead of time with a clearly defined path of promotion as the company expands and hits revenue milestones. Even though the initial negotiation process can vary with each hire, it is important to reward current employee success with transparent, merit-based progression. Industry benchmarks can determine if a projected compensation plan matches market factors and can provide data-driven, objective context for individual raise decisions. More importantly, when employees can request and review an objective plan, employees are more likely to believe that leadership has an objective plan.
One of the most important things to remember, in any tough conversation, is how leaders’ actions are perceived by the rest of the company. When you hire top tier talent, these employees observe and evaluate the way leadership tackles tough conversations with the same analytical skillset and high intellect that they use in their day to day tasks. Leaders with the ability to manage the difficult situations can motivate employees to evangelize the company and recommend it to top talent in their network.
Read more in-depth advice on navigating tough conversations on First Round Capital’s Blog.