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How can having a process for compensation, complaints, and promotions save you a lot of headache? What should those processes look like?
Once a company grows, it should start to develop processes around three situations: compensation, promotions, and complaints. Having processes around these subjects will help reduce company politics and set expectations.
Continue reading to learn how to learn how to develop a compensation, complaint, and promotion process.
What Processes Should Your Company Develop?
Below we’ll cover three situations to build processes around: compensation, promotions, and complaints.
An employee comes to you with a job offer from another company. The salary is higher than what you pay your top performer on the team, and this employee is not the top performer. You don’t want to pay her that much, but right now you can’t afford to lose her because her work is critical to hitting your roadmap.
The bad shortcut is to match her offer and ask her to keep it secret. You get to keep her while limiting the damage (or so you think).
In reality, news of this will spread. She’s already talked to colleagues at the company about whether she should take this obviously better offer; when she stays, they’ll have questions. If she doesn’t want to lie, she’ll have to tell the truth. Soon everyone will know the way to get a raise is to interview for other jobs and threaten with a better offer.
Run formal performance review and compensation processes. Decide how you want to compensate people based on their contributions, and make sure that is followed with no exceptions.
If someone comes to you with a competing offer and threatens to quit, you should simply say that her compensation will be reviewed with everyone else’s, and exceptions won’t be made.
Your VP of sales comes to you and says he wants to be COO one day. He asks whether you agree he has potential for the role; you say yes. He asks what skills he should work on to be competent for the COO role, and you make a list. He leaves, and you feel happy that you’ve coached someone to build his career.
Soon the VP of marketing comes to you in a panic. She says that the VP of sales has announced that the CEO is grooming him for the COO position and that other people should get comfortable with reporting to him soon.
Create a formal process around promotions for every employee and department. Make the processes consistent across the company.
First, define the responsibilities of each level and the expectations of performance. To be promoted to this level, a person must meet these criteria. Be as specific as possible in defining the criteria. You can even calibrate to current people: “must be as good at system design as Teri.”
Next, define a process for promotions. A standard process can look like this:
- Managers propose their employees for promotion, with an explanation of how their candidate meets the criteria at the level.
- The promotion committee reviews these proposals for every significant promotion across the company. At the meeting, the committee compares the candidate’s skills to those of people currently at that level.
- The promotion committee makes sure promotions are level across departments, so that sales doesn’t have ten directors while product only has two.
For senior executives, the promotion committee may involve the board of directors.
An employee brings in a complaint about her manager’s behavior. It’s news to you, but you listen empathetically and agree it sounds like pretty bad behavior that should be punished. You promise to look into it.
Soon, you hear rumors that you think the manager’s performing terribly and you’re set to fire the manager any day now.
If someone complains about another person’s behavior, get the two in the room and hash it out right there. This will reduce miscommunication and politics. Usually it solves the problem quickly.
If someone complains about another person’s performance, then you usually have one of two reactions:
- You already know about the problem. In this case, you’ve already waited too long, and you probably need to fire the person she’s complaining about.
- You don’t know about the problem. In this case, stop the conversation, say you disagree with the complaint. Afterward, look into the performance of the person she was complaining about. If that person is doing fine, then you’ll need to look into the complainer and question her motives.
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- What it was like to head a company through the dotcom bubble and subsequent burst
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