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Crucial Conversations for Mastering Dialogue

Sharing Difficult Financial News

Joseph Grenny

Joseph Grenny is coauthor of three bestselling books, Influencer, Crucial Conversations, and Crucial Confrontations. His fourth book, Change Anything, will be available April 2011.


Crucial ConversationsQDear Crucial Skills,
I have some very tough news to deliver and would appreciate your help. My colleagues and I have to tell some good performers in our company that pay increases are only going to a select few of the highest performers. I know they’ll feel the compliment is disingenuous and will wonder why they weren’t one of the few who got the increase. Any advice?

Can’t Spare a Dime

A  Dear Can’t Spare,
Yikes. This is not a fun conversation to have. All of us who have had to disappoint, fire, or critique a dear colleague sympathize with you. When my partners and I looked at the gloomy economic predictions for 2009, we faced some similarly uncomfortable conversations. We did not know what the year would bring, but felt a need to be honest about the prospects while expressing optimism about our incredible team’s capacity to rise to the challenge. We held everyone’s wages flat for the first half of the year while we leaned into the headwinds hoping—and working—for the best.

Your message is even trickier because you have some discretion to offer increases. It’s easier to say, “No one gets a raise” than it is to say, “We’ve singled you out as someone specially qualified to not get a raise!”

Here’s how I would approach that tender message.

Why before what. Don’t share the policy until you’ve outlined the principles. Be sure you, as a management team, have made principle-based decisions; then share the principles. For example, you might say, “One of our principles in determining increases is that we must be market-competitive. Our only hope for getting through tough times is keeping the team together, and the truth is some positions are at greater risk of turnover due to wage discrepancies than others. It would be bad for all of us if we failed to address that and lost precious capacity in those priority areas. This is NOT about who we value more, it is a simple question of externally determined economics.”

Don’t say it if you don’t believe it. As you share the principles behind the policies, be sure you keep your integrity in check by describing only those that have been consistently applied. If, for example, you have cut special deals with certain people that violate principles you are comfortable stating publicly, then do not claim you have been consistent. If you do so, you will certainly be found out and will violate trust in a way you are unlikely to recover from.

Invite feedback without compromising authority. After sharing your principles and your policy, invite feedback. Be clear that the decision is already made and that it could not be made by consensus, but demonstrate your willingness to learn by allowing people to share how they see things similarly or differently. Don’t put yourself in a position of trying to convince anyone you’re right. Rather, begin by saying, “I’d like to just listen to your views. I know I won’t satisfy many of you, so I’m not going to try to make excuses or explain this away. But I care about your opinions and I’d like to hear them if you want to share. Perhaps, at a minimum, they may influence our decisions in the future.”

Acknowledge disagreement. It is likely that, following your candid description of principles, reasonable people will disagree—especially if the principles mean they get the short straw. Few people listen to such a description and conclude, “I see now that I am worth less than others. I am happy that they got the increase.” Your goal is not to garner applause. It is more modest. Your goal is to build trust by sharing your thinking and listening to that of others. After sharing the principles and policy, just listen. Acknowledge views that have merit without suggesting you’re revisiting the decision. Remind them this is a leadership decision and involved tough tradeoffs.

Ask for the long-term view. Conclude the discussion by orienting your employees to the future. Apologize for any hurt or disappointment you’ve caused, but do your best to engage them in contributing in a way that makes the pie bigger for all in the future.

Good luck with this very crucial conversation.


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2 thoughts on “Sharing Difficult Financial News”

  1. Greg

    In my opinion, starting with “our only hope …” is dramatic; smart folks will immediately think of alternatives, then it becomes a discussion of the decision. If you’re in chapter 11 maybe the language is justified. And you’re framing the conversation from the negative point of view, “giving raises because I’m afraid key folks will quit”. I think it’s better to say raise money is limited and it’s going to team members that achieved the most, assuming that is the truth because there may be other reasons. Maybe your top contributor is a new college hire who is grossly underpaid …

  2. Bob

    A thoughtful post Joseph, and indeed, not a fun position to be in (though making cuts is much harder).

    Personally, if things are that tight, I’d be inclined to hold raises for everyone as that message is easier to deliver on a wide scale and won’t create the morale hit this process is sure to generate. I’d then take that money and put it in a pot that is tied to specific performance or achievements that everyone could have a shot at. That way, odds are the top performers will probably get it, and it won’t be diluted over the regular income payments.

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