The New Manager's Dilemma: How to Run Fair Performance Reviews with No Budget and Little Context
- Sergio Visinoni from Sudo Make Me a CTO <makemeacto@substack.com>
- Hidden Recipient <hidden@emailshot.io>
Hi, 👋 Sergio here! Welcome to another free post from the Sudo Make Me a CTO newsletter. If you prefer to read this post online, just click the article title. As this is a free newsletter, I do immensely appreciate likes, shares and comments. That's what helps other readers discover it! The New Manager's Dilemma: How to Run Fair Performance Reviews with No Budget and Little ContextYou've recently joined a new company as a manager, and you're faced with the challenge of reviewing people and rewarding them with a small envelope. How do you handle that effectively?
Today's article is the first from a series inspired by recent conversations in the Sudo Make Me a CTO Community. With Summer here, it's a good time to take a step back, reflect on your current situation, and make deliberate investments in your personal and professional future. It's a great time to explore new avenues, discover new interests, and educate yourself on topics that you find interesting and relevant. With today's article, I'm launching the Sudo Make Me a CTO Community Summer promo. In the next 4 weeks, starting today, I'll share discount codes and special offers for joining the community. The sequence will be as follows:
Each coupon will be redeemable 5 times before it expires. In essence, early joiners get the best deal. Read through the article to find this week's code and the link to join us at a special rate before it's sold out! The Wake-up CallYou landed a new leadership role. You’re excited to build, lead, and make an impact. Then, just a few weeks in, the calendar notification arrives: "Performance & Compensation Cycle Kick-off." Suddenly, you're faced with a classic new manager's nightmare: you have to evaluate an entire team you barely know. To make things even more challenging, due to financial constraints, you only have a small budget for the annual salary reviews. You need to distribute a small amount to a group of people you barely know, who might have expectations and might have been promised raises you're not in the situation to deliver. This case is way too common. In fact, one of our community members has been facing it lately. It's a perfect case study in navigating one of the toughest challenges a new leader can face. Here's a practical guide based on the conversation we had to help you turn a potentially high-stress situation into a trust-building opportunity. Step 1: Start with Radical TransparencyIn such situations, your best tool is honesty. Your team knows you're new, so don't pretend otherwise. The first step is to openly acknowledge the constraints you’re working with and make sure each one of them understands the situation as it is. In your one-to-one conversations with each team member, be upfront about the challenge you're facing:
This approach disarms anxiety and shows respect for your team. You are role modelling the behaviours you expect them to adopt, too. In essence, rather than making uninformed judgments, you're making a responsible decision based on the information you have. Equally important, you're being transparent about the approach and the underlying motivations. Some people might still disagree with the strategy, but as you stick to what you declared, they'll learn to trust your words. Step 2: Create a Fair Process to Fill the GapsHaving a limited amount of first-hand observations about your team member's performance should not be an excuse for not trying to gather as much information as possible from other sources. Acknowledge that the information you collect will be partial and biased: it will be up to your judgment to decide what to do with it. What's important at this stage is to bring in a diverse set of perspectives and look for areas in which they tend to diverge significantly. These will be areas you'll want to observe closely going forward. To build such a holistic picture, you can do a combination of the following:
Use this information to advise your judgment, but ensure you don't just abdicate your responsibility for making the final call. No amount of "they told me so" will discharge you from the responsibility of the evaluation you deliver. If something potentially worrisome emerges from those conversations, address it respectfully in a chat with the relevant team member, asking for their perspective and their plans for dealing with similar situations in the future. Step 3: Be Principled and Open About Your Limited BudgetLet's start with accepting the reality for what it is: with a tiny salary review budget, you cannot make everyone happy. But you'll have plenty of ways to make everyone unhappy. Even with limited information about your team's performance, giving everyone the same amount (in percentage) as some sort of Solomon's decision might not be your best strategy. Instead of spreading it so thin that it becomes meaningless, the best approach is to define and communicate the principles you're applying for allocation. A powerful, fairness-first principle is to prioritize equity:
People are more likely to accept a disappointing outcome if they understand and respect the rationale behind it. When they see you’re using your limited resources to correct unfairness, it builds credibility and trust. Conversely, if you were to give everyone the same amount, it might signal a lack of judgment or the unwillingness to reward merits. Putting It All Together: Your First True Leadership TestFacing a tough performance cycle right out of the gate feels like a test… because it is. It’s not just a test of your judgment. It's a test of your mindset and character as a leader. By embracing radical transparency, creating a fair process to fill the information gaps, and using your limited budget to ensure fairness, you do way more than survive the review season. You build a foundation of trust that all high-performing teams are built on. Your team will remember not the size of the raises, but the integrity with which you led them through a difficult situation. That is an investment that will pay significant dividends for years to come. Summer Promo - Week 1 Discount CodeI hope you enjoyed the article and the topic we explored in one of the recent live sessions in the Sudo Make Me a CTO Community. As promised, here is this week's code to join us at a special price. Using the code SUMMER5012 you'll benefit from a 50% discount over the first 12 months, or click on the link below to have it automatically applied to your checkout. The standard 30-day money-back guarantee applies. Don't forget: there are only 5 seats available at this price, and the coupon will only be valid for one week. Don't miss this opportunity to join a community of talented and thoughtful engineering leaders to accelerate your personal development. To find out more about the community and the promo, visit the official Notion page in which you'll find all the details. I'm looking forward to getting to know you in person very soon! Help the newsletter remain free!Engaging with my professional services is a great way to ensure I can continue dedicating many hours each week to producing what I hope to be high-quality content. Those services revolve around three legs:
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