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The East African : April 28th 2014
42 The EastAfrican BUSINESS APRIL 26 - MAY 2, 2014 MANAG E R How to have open discussions about pay and bonuses with you≥ employees COMMENTARY AMY GALLO “Even if you’re a seasoned leader, it’s helpful to work out what you’re going to say ahead of time. Write down your main points.” good news to share — a generous bonus or a well-deserved promotion — assigning a number to the value of someone’s work is tough. It’s especially difficult if you’re not the one calling the shots (most managers don’t set their own compensation budgets). Whether it’s your decision or not, one thing is certain: It’s a critical part of a manager’s job to have frank and open discussions with employees about pay. T What the experts say According to a recent Pay- Scale survey, 73 per cent of leaders don’t feel “very confident” in their managers’ ability to have tough conversations about compensation with their employees. This is in part because many bosses lack the information they need to do so, notes Tim Low, vice president of B2B marketing at PayScale. “It’s awkward for everybody,” says Karen Dillon, author of Harvard Business Review’s Guide to Office Politics and coauthor of How Will You Measure Your Life? Still, avoidance is not an option. As V.G. Narayanan, the Thomas D. Casserly, Jr. Professor of Business Administration at Harvard Business School and chair of the Board of Directors Compensation Committee Executive Education Programme, says, “These are the most impor- alking about money with your employees can be uncomfortable. Even when you’ve got tant conversations you have throughout the year.” Here’s how to master them. Talk early and often When you sit down with an employee to talk about salary, there shouldn’t be any surprises. “The more frequently you have the conversation, the easier it is,” says Narayanan. He suggests you start the year by discussing compensation. Talk about what kind of bonus or raise the employee might expect if he meets her goals — or doesn’t. Then have regular check-ins throughout the year to talk about how he is performing. Narayanan says this can stave off later disappointment. Plus, if you allow your employees to imagine themselves in the decision-making role, they’re likely to be much fairer. Do performance evaluations separately Compensation should be linked to performance, but Low advises discussing the two topics separately. “If you talk about money in the shadow of performance, it will sound like white noise and your employees will just fixate on the compensation,” agrees Narayanan. Instead, deliver the formal evaluation first, focusing on personal growth and development. Then wait several weeks to deliver news about raises or bonuses. When you sit down with an employee to talk about salary, there shouldn’t be any surprises.” Involve others, if possible Everyone has favourite em- ployees — “We’re human beings; we like some people and don’t like others,” Narayanan says — but there are ways to counteract those natural biases. He recommends working on compensation decisions in teams of two or three. “When more people make the call, employees know there are checks and balances, and that the process is fair and consistent.” Prepare for the conversation Dillon says that rookie man- agers often make the mistake of walking into these conversations without a plan. Even if you’re a seasoned leader, it’s helpful to work out what you’re going to say ahead of time. Write down your main points. Think through how you’re going to represent the company while also being yourself. She suggests using empathy to prepare. “Ask yourself: How is this person going to hear my message? What you say should persuade them that what you are giving them is fair,” she says. Communicate their value This conversation is an op- portunity to tell employees how important they are to the organisation. “You’re in a partnership with your employee and you have to let them know that you deeply value their contributions,” says Dillon. Make it clear that you appreciate their work. “You want to inspire them to continue to create value,” says Narayanan. Provide context When employees are disap- pointed by their raise or bonus, it’s often because they lack information. Share the big picture with them: How the company is performing compared with competitors and the range of raises or bonuses the organisation is offering this year. “Explain what people are getting for this job with this title in this market with these skills,” says Low. “It’s incumbent on you to understand what it means to be paid fairly.” Don’t engage in conversation about other employees’ pay. If someone gripes that a colleague is making more, respond with something like, “I’m only willing to talk with you about your compensation and performance.” Be ready for a reaction. Even if you think you’re giv- ing great news, be prepared for some emotion. “You can’t give everyone everything they wish for,” says Narayanan. “When an employee gets upset, make sure you hear them and recognise their emotions, but don’t cave in,” warns Dillon. If there’s a way to address the employee’s concerns, offer to get back to her in a few days. It’s your job to go to bat for the employee if you feel it’s warranted. “But don’t leave the door open unless you intend to take action,” she says. Whatever you do, don’t reward managers for throwing tantrums. Amy Gallo is a contributing editor at Harvard Business Review. Adapted from NYTS. C≥eating a happy wo≥kplace th≥ough coaching the toxic leade≥ By MANFRED KETS DE VRIES Special Correspondent Senior executives have the power to create an environment that allows people to give their best — or a toxic workplace where everyone is unhappy. Below are some of the more common pathologies I’ve encountered. The narcissist The dysfunction most frequently found at senior levels is pathological narcissism. Driven by grandiose fantasies about themselves, pathological narcissists are selfish and inconsiderate, demand excessive attention and pursue power at all costs. How to recognise the condition A good way to spot a narcissist is to look at how his subordinates respond to him. Coaching a narcissist Avoid anything that might upset their delicate sense of self. You must convey respect and acknowledge his need to be recognised. Show empathy initially to gain trust, so you can begin to try minor confrontations of individual dysfunctional behaviours. The manic-depressive Manic depression, or bipolar disorder, is another psychological condition that some executives suffer from. It varies in intensity, but even relatively mild forms can derail careers and alienate friends and colleagues. Coaching a manic-depressive Serious mood disorders like manic depression are usually treated with a combination of psychotherapy and medication. The problem is, manic-depressives are rarely receptive to receiving treatment. Getting them to admit that they have a problem is a main challenge. The best approach is to make manic-depressives confront the reality of their relationships with others, and work with the people they affect to create a new structure in which they can operate safely. The passive-aggressive This term describes a person who expresses negative feelings indirectly, and shies away from confrontation. The behaviour originates in families where the honest, direct expression of desires is forbidden. They go through life being outwardly accommodating but obstructive in an underhanded way. How to recognise the condition Though passive-aggressive executives overtly agree to requests, they covertly express their resentment of them by missing deadlines, making excuses or undermining goals. They tend to use procrastination and forgetfulness to avoid fulfilling obligations. Coaching a passive-aggressive The coach has to encourage transference by pointing out the extent to which unconscious, seemingly irrational processes affect behaviour.
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