A Human Approach to Promotions, Pay Raises and Terminations

A key part of good corporate governance is to treat your workers fairly, ethically, and most of all with compassion. How a company handles the decision-making and communication process around seemingly routine procedures can make a world of difference for employees on the receiving end. By facilitating a culture of transparency and respect, the company itself will benefit from a more engaged workforce in the long-term. It's an investment to take the time to understand each situation from varying perspectives, but the return is manifold.

Every manager knows the playbook for handling promotions, pay raises and terminations. These are familiar procedures in the day-to-day of a company. So much so, we often forget just how much stress these situations place on employees. The negative implications may manifest differently for each individual, be it on a personal, professional or emotional level.

Some questions we may ask or strategies to mitigate these negative effects are: does the employee feel they own their professional growth? (instead of the company); are employees being actively mentored and given honest feedback? If the employee is being fired, do they have support and enough time to find a new job? How will the other employees be affected by it? What’s the best way to deliver the news? How fair and transparent is the process from beginning to end?

Beyond those questions, are we empathetically relating to the change that employee is going through? How can we help, or minimize the suffering in the event of bad news? Here's a good example from Harvard Business Review on dealing with the different emotions an employee may feel after they're fired:

The article gives a good view on how to turn something as procedural as a termination into a sensitive approach and an opportunity for honest dialogue.

At Tablecloth, we strive to support this people-centered mindset in all the funds and companies that we work with. As part of the G of Governance in ESG, we help entities lear how to approach these challenging organizational moments in the best way possible. Here are some of the metrics we look for when evaluating the companies when it comes to promotions, pay raises and terminations:

• What is the employee satisfaction for their latest promotions and pay raises? Do they feel treated fairly by the company?
• How does the employee retention in that company relate to their promotions and pay raises?
• Do employees have regular annual reviews with pay raise incentives? Are these regular reviews fair considering that job title in a global average?
• How regularly do men and women receive promotions in that company? What about different races and ethnicities? Do certain demographic groups get bigger raises than others? How do women fare in terms of pay equity?
• What is the distribution of people who accept promotions without raises? For example, are they mostly young people? What are the reasons they do it?
• Did the company respect the employee's notice period on termination? How frequently? How can it improve?
• What is the comparison of employees' voluntary termination vs company's termination.
• What is the comparison of company dismissals (firing) vs layoffs.

The good thing about a human approach is that it can be measured and quantified. And having the tools and expertise to do it is a valuable differentiator in today’s increasingly competitive world. A human approach is not just the icing on the cake, it should be an essential part of how to do it.‍