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How to Make Tough Decisions as a Manager

HANNAH BATES: Welcome to HBR on Leadership, case studies and conversations with the world’s top business and management experts – hand-selected to help you unlock the best in those around you.

Imagine you’re a new manager and one of your team members consistently underperforms, but there’s a catch. Your struggling employee is a personal friend of your boss. When performance review time rolls around, should you be honest and give them a low rating or should you avoid conflict and give them the same rating they’ve been receiving for years? There are no simple answers to the tough decisions that managers face. Harvard Business School Professor Joe Badaracco says that in these sorts of situations, hard and fast rules only go so far. Instead, managers must do the more difficult thing. Use their best judgment to find a solution. In this episode, Badaracco explains how managers can approach what he calls gray area decisions. First, gather as much information as you can and take different perspectives into account. Then consider the consequences of different possible actions, the values of your organization and your own personal values. If you’re a new manager facing a tough dilemma, this episode is for you. It originally aired on Cold Call in November 2016. Here it is.

BRIAN KENNY: You’re fired. These are two words no one ever wants to hear, and with the exception of reality TV, it’s not usually how the message is delivered nowadays. Today, in an effort to be fair, most organizations have a process that involves personal improvement plans, mentoring and monitoring, even counseling, before taking such a drastic step of severing employment. Yet still the decision to fire an employee is rarely clear cut. And for the person being transitioned, quotations, the rationality used by their manager for that decision is most assuredly questionable. So, what exactly does or should go on in the mind of a manager deciding the fate of an employee? Today we’ll hear from Professor JOE BADARACCO about his case entitled “Two Tough Calls.” I’m your host, Brian Kenny, and you’re listening to Cold Call.

SPEAKER 3: So, we’re all sitting there in the classroom.

SPEAKER 4: Professor walks in.

SPEAKER 5: And they look up and you know what’s coming. Oh, the dreaded Cold Call.

BRIAN KENNY: Joe Badaracco is the John Shad Professor of Business Ethics at Harvard Business School. His research focuses on what counts as sound reflection for busy men and women who have serious responsibilities and face hard practical problems. He’s the author of many cases, articles and books on the topic, including the recently published Managing in the Gray. Joe, thanks for joining me.

JOE BADARACCO: Glad to be here, Brian.

BRIAN KENNY: So, I really enjoyed reading this case and reading parts of the book, and I think many people, anybody who’s managed a team, can relate to the challenge that you’re going to talk about in this case. But maybe you could start just by setting the case up for us. Who’s the protagonist and what’s going on?

JOE BADARACCO: Sure. The case is an unusual case, it’s written in the first person, so you’ve got to give the protagonist a name. So, let’s call her Susan. But you’re really hearing Susan’s voice and you’re hearing Susan tell her story. So, she was a computer science graduate, this is her first job, full-time job. She’d had a couple internships at Microsoft. She was a very talented programmer.

She also had a lot of management potential, so she was spotted early as somebody who could move up pretty quickly at this online retailer. She got two promotions pretty fast. She found herself managing a team of 14 people. Some of them were about her age. They were techies like her. Some of them were older than her, and some of them were not performing anywhere near the standard she expected. And it came time for her to give reviews, and she wanted to give reviews to several people that would’ve basically triggered lots of problems. I’ll talk in particular about a guy named Terry. So he had been brought into the company because he was a scuba diving pal of some of the executives.

BRIAN KENNY: Oh, we’ve all encountered a Terry.

JOE BADARACCO: And from Susan’s point of view, he was basically contributing nothing to the team. She’d worked with him, she’d tried to find some things for him to do, but her view was his contribution was basically zero. Now, under the performance evaluation system, it was one to five, and he’d been getting 3.5 for a number of years, and that was fine.

BRIAN KENNY: Pretty good.

JOE BADARACCO: But she thought he deserved a 2.5. In this company, 2.5 meant that you were basically on a greased shoot out the company. It was accompanied what’s called a PIP, a performance improvement plan, which a lot of companies have. But this was really a tripwire. And once you were on a PIP, as soon as you came in late or something like that, you got a box and you were out. So she wanted to give him what he deserved, the 2.5. She floated this idea among the people she worked for, and they said, you’re kind of young in the job, you’ve been doing well so far. Why make some waves? Are you sure you’ve got enough experience to judge him? Doesn’t he deserve another chance, given that he’s had threes and three point fives?

BRIAN KENNY: And he’s a good scuba diver.

JOE BADARACCO: Apparently an excellent scuba diver. Yeah.

BRIAN KENNY: Let me stop you there.


BRIAN KENNY: Because I want to want to pull the reins back in a little bit, and I guess one of the things that I’m curious about is why you decided to write this case, why you chose to write it in the way you did?

JOE BADARACCO: Well, after the incidents described in the case, the young woman came here to HBS to get an MBA. So I had her as a student. And I don’t recall how we got to talking about this case possibility, but it seemed really promising, because as you pointed out, many of our MBA students have already been in positions where they’ve had to let somebody go. Many of them in the last few years have had family members that have been fired or laid off, and some of them will actually admit in class that they personally have been laid off. So it’s a very real subject. And this was somebody who’s a contemporary of our MBA students facing one of these tough calls.

BRIAN KENNY: Tell me a little bit more about Susie. Is that what we’re calling her?

JOE BADARACCO: Yeah, Susie, Susan. Sure.

BRIAN KENNY: So, is she a millennial? Does that factor into this?

JOE BADARACCO: Well, I think she was kind of a millennial, but I think she was basically herself and she prided herself on being very direct to the point of being blunt. She thought that in organizations, people were rarely treated honestly, that there were lots of games played that people told you you were doing well when you weren’t doing so well and so forth. She said she was going to be blunt, she wanted people to be blunt with her.

She was also, as I mentioned, younger than some of the people she was managing, and some of the people she was considering letting go. And as you sort of read her first-person narrative in the case, some students sort of like her, they see her as a practitioner of what’s called sort of extreme transparency. And others say, this is kind of a arrogant, aggressive individual who’s a little bit too full of herself. And then what’s interesting in class is some students, often women will say, you wouldn’t say the same thing about a male protagonist in this situation. So that’s another issue that comes up in the case.

BRIAN KENNY: Yeah, you talk about her technical proficiency, which has given her some affinity with the technical team, which is pretty important. It allows her maybe to get things done a little faster because she kind of understands what she’s asking people to do. So, she’s a AA, hard-working type person, and she makes her hiring decisions pretty specifically based on her own personality type.

JOE BADARACCO: Exactly. She wants people who she said, come out of college hungry. They love to have goals, they’re willing to work 80 hours a week, and she is too. And she says to them, “Look, all you need to do to be successful here is to tell me what I need to do to help you be successful and complete the mission that our team has.” So, it’s a complicated picture. In many ways, there are things that are admirable about her, but there’s other things that kind of put people off.

BRIAN KENNY: So, what are some of the things as a manager that Susan needs to think about? I mean, it doesn’t seem like she’s in a place where she can just sever that relationship and have Terry move along. There’s a process that she has to go through both intellectually as well as managerially.

JOE BADARACCO: Yeah. Well, let me mention, first of all, what’s the central idea in my book that’s just come out. And it can be summarized essentially in a single sentence, and it says, “When you face one of these difficult decisions, a gray area decision, first of all, you want to work through it as a manager.” That means you get the best information. You can look at things in a couple different ways. If there’s expert judgment, in this case HR that can be brought to bear, talk to the senior people, which she did. You get the best information and judgments you can. That’s what it means to work through it as a manager.

But then in the end, it’s a judgment call and you’ve got to approach it as a human being. You’re going to make that call, you’re going to live with the consequences. And so it’s in that context that some of the questions in the book are really quite relevant, and these questions, by the way, aren’t mine. They’re not Harvard Business School’s. Basically, they come from a multi-year effort to try to look at how great thinkers over the millennia have advised us to look at really hard problems. So you look hard at the consequences, full consequences as objectively as you can. You think about what you believe your core human duties are. So what does she owe Terry? What does she owe the people on her team? You think about the values of your organization. You think clearly about what you can live with. Because you will live with it, and you’re also going to be held accountable in your organization.

A lot of people think if you’ve got one of these difficult decisions, you just trust your judgment, you trust your gut. You look at your moral compass. And what I really emphasize in the book is, the first thing you’ve got to do is the best analysis you can as a manager, okay? If you can use big data analytics, whatever it is, wring everything you can out of what you can learn. Then you make a judgment as a human being. But again, that’s not gut feel. That’s after you think through consequences, your duties, what’ll work. It’s only at the very end that you finally trust your judgment after it’s been tempered and shaped and guided by the preliminary steps.

BRIAN KENNY: You mentioned before the obligation that Susan as a manager has to Terry. Does Terry have an obligation back to Susan to do the job well? Does that make the whole decision much-

JOE BADARACCO: He certainly had an obligation to the company and the team to pull his oar, and he wasn’t doing it.

BRIAN KENNY: And part of my question was sort of what’s at the core of it too, is that I mentioned in the introduction how most organizations have sort of an extreme set of processes that one needs to go through. Have companies gone too far in trying to make sure that they’re giving every opportunity for the employee to perform?

JOE BADARACCO: I think that’s a tough one. I don’t have any basis for generalizing on that. At the end of the day, even when there are elaborate systems and lots of steps and checklists, a lot comes down to the judgment of managers. When do you start putting notes in a file about someone’s performance? Certainly you need to inform them if they’re on thin ice or if they’re about to go on probation. What do you tell them? How candidly do you inform them? How helpful are you? A lot of these things come down to one-on-one judgment calls, sort of the character and experience of the person who’s making the decision.

BRIAN KENNY: In the book, you talk about this concept of moral imagination. So can you describe what that is and how it factors into these kinds of decisions?

JOE BADARACCO: Well, it has a lot to do with how you actually deliver the bad news and how you follow up after that. You’ve really got to put yourself as best you can in their shoes, as if you were the person being fired, or let’s say it was one of your kids or your parent, sibling, how would you want to be treated? That’s a way of bringing to the foreground a lot of these basic human considerations that can be lost if you’re simply angry at the person for not performing, or you’re just going through the company’s checklist on how to process people out.

BRIAN KENNY: You’ve discussed this case in class before?

JOE BADARACCO: Many times.

BRIAN KENNY: So, I don’t want you to give away too much, but what kind of reactions do you get?

JOE BADARACCO: Well, first, students really do engage in this. I’m talking here about MBA students. They either have been or expect soon to be in situations like this. Secondly, they have, as I mentioned earlier, a variety of responses to Susan, so that pulls them further into the case. Some of them make very sound comments, and I think one worth thinking about is this, it says, look, you’re managing a team, you’ve got a company, whatever. Should you really expect that everybody on that team is going to be an A player, or after coaching from you is going to be an A player? The point they make is that good managers learn to work with… They want As, they have some Bs, they live with some Cs. And that’s what managing in the real world is like. So there’s a really good set of discussions about not just what she should do, but whether she should do anything.

BRIAN KENNY: Joe, thank you so much for joining me.

JOE BADARACCO: You’re welcome, Brian.

HANNAH BATES: That was Harvard Business School professor Joe Badaracco in conversation with Brian Kenny on Cold Call. He’s also the author of the book, Managing in the Gray: Five Timeless Questions for Resolving Your Problems At Work.

We’ll be back next Wednesday with another hand-picked conversation about leadership from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. When you’re ready for more podcasts, articles, case studies, books and videos with the world’s top business and management experts, find it all at

This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media. Special thanks to Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you, our listener. See you next week.

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