When you talk about an employee’s pay during a performance evaluation discussion, you are no longer talking about performance. Pay adjustments should follow from your assessment of the employee’s performance. However, when you discuss pay in the evaluation meeting, it distracts from your message about performance. If you have a choice, separate the two conversations so that performance is the main event.
Ideally, assessments about an employee’s performance are done without regard for how the evaluation will impact the employee’s compensation. Divorcing the two issues allows you to call it like it is, without the emotional influence of how much your decision will cost. It allows you and the employee to truly focus on their successes and their plan for the coming year. When pay enters into the conversation, it’s hard to focus on anything else.
Many organizations make the mistake of advertising a pay adjustment structure prior to the performance evaluation process. This practice leads the employee right to the bottom line of the evaluation. We all want to know what our next paycheck will look like. As a result, the “meat” of the evaluation is missed.
Advertising pay impacts prior to the assessment of performance can also lead to managers “gaming” the system. If the manager feels that they want to recognize the employee with a pay increase, even if the employee’s performance has not warranted it, it’s easy to select the ratings that will result in the desired outcome.
If you want to create a work culture that values performance and a performance evaluation process that focuses on outcomes, save the conversation about pay for another time.