<i>Dear Workforce</i> How Do We Handle Reviews When We’re Not Increasing Pay

September 16, 2001

Dear Workforce:

Our company recently had a large reduction in force and is having financialtroubles. Our policy stipulates that employees receive annual reviews. However,with the current financial situation of the company, we are not giving payincreases. I believe we still need to stick with company policy and continuewith reviews. How do I do ask the managers to provide reviews for employees,knowing we are unable to give increases?

-- HR Coordinator, finance/insurance/real estate, New York, N.Y.

A Dear NY HR Coordinator:

Like so many companies, you've fallen into the trap of linking performancereviews with pay increases. While the results of a performance review could formthe basis for adjustments in compensation, let's remember that this is not thepurpose of the review.

The focus should be on reviewing performance and determining what steps mightbe taken to support the employee in further growth and performance improvement.A review is simply a written documentation of what already should be knownthrough an ongoing coaching process, as well as an opportunity to formalize arecord of growth, achievement, and opportunity.

Take advantage of this special time in your company's history to take thecompensation pressure off the performance-review process. Create a schedule ofperformance reviews to be completed every six months (away fromcompensation-change expectations). Provide training for supervisors on how toconduct a constructive, upbeat, realistic performance interview. Do the samething for employees, asking them to complete a performance review form that willbe compared against the one completed by the supervisor -- a great check oncommunications effectiveness.

Remove the compensation imprint and get people more involved with the reviewprocess. Make this a positive move within the company, designed to help peoplegrow and support more frequent and complete communication about performance inan ever-changing environment.

SOURCE: Roger Herman, The HermanGroup, author of "Howto Become an Employer of Choice," senior fellow, The Workforce StabilityInstitute, Greensboro, N.C., April 30, 2001.

LEARN MORE: See "The New Thinking in PerformanceManagement"

The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.

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