Why you should never discuss compensation during reviews

I recently met a very successful entrepreneur who is dominating a very competitive industry across the U.S. His most important strategy is to make sure that he hires and keeps the best and brightest people. He does everything he can to highly engage them in their work, and his results are astonishing. I took away many great insights from the discussion.

He made one of his most powerful points by starting with a simple question: “What is the first thing you do when you get a birthday card from Grandma who always tucks a little money in her cards?” The answer, of course, is to see how much money is tucked in there. His next question was: “Do you really pay much attention to what the card says?” His point was that during coaching or performance reviews we should not be talking about compensation. That should be a separate conversation at a different time and on a different cycle. I agree with him that the compensation discussion may trump the coaching discussion if the two are happening at the same time.  If someone gets a raise, they may not take seriously coaching on a problem area. If someone does not get a good raise, they may not be as open to the feedback on how great a job they are doing.  This insight hit home hard for me since we currently combine the two at Inclusion System.

I am thinking that grandparents everywhere may want to reconsider an age-old practice if they want people to read their cards. I know we will not be including the money in our “cards” anymore!

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