One of the toughest conversations you'll ever have as a leader is the one you have with someone who didn't get promoted. This conversation is hard because if the process was done correctly, you interviewed at least two people who deserved it, but you could only hire one for the job.
At the end of that process, you have one very happy person and one very unhappy person.
You can't blame the unhappy employee who didn't get the position, especially if they are also a high performer. In fact, I would be more confused if my high performer wasn't upset! The majority of high performers would not take the news of losing out on a promotion to another employee as a positive sign.
The big question is: How do you have that conversation with the employee who lost out on the promotion and not only keep them employed, but also keep them high performing and on the path for the next promotion? Most leaders fail at this, and most employees who lose out on a promotion usually end up leaving the company in a short time.
Don't think this is just an employee problem. I worked in HR at a Fortune 500 company that was picking a new CEO from three candidates from the C-suite. One got chosen and within months, the other two left even though all three got along splendidly before the change.
Keeping employee engagement after a lost promotion
Transitioning both the employee being promoted and the employee (or two) who missed out is important to the success of an organization and to you as a leader. Here are some ideas to help you when you need to have these tough conversations:
Don't sugarcoat your message
You should be upfront and candid about why you made your decision. This is true for any employee, but especially for high performers.
Be very clear what this will mean for them as an individual
Do they now report to their former peer, is there a new management structure, when will that new structure be rolled out, etc.?
Give them some time to process
The last thing you want to do is jam a development plan down their throat when you just kicked them in the stomach. Talk about the situation, and schedule to meet again the next day to talk about next steps with them.
Let them know how this will be communicated to the organization
You should explain the specifics and the timing of that communication.
Develop an action plan
It's important to be frank with the employee about where you see their career going with your organization, and what will get them to the next phase of their career.
Understand that most organizations and leaders screw this up, and unfortunately that screw-up leads to losing talent. High performers don't want to be told that they were really good, but just missed out; they want the truth about why they weren't picked. If they smell a phony answer, they'll be gone. The truth may sting, but most will get over it. Once they've had some time to process the loss, you can work with them to create a new career plan.
Moving on from a missed promotion
Most of the time when someone misses a promotion it isn't because their functional skills are lacking; it's a shortfall in their soft skills. For many looking for a promotion, losing out because of soft skills can be even harder to take: "Sorry Bill, we think Jane will be able to motivate the team better than you." Bill is left wondering how he can become more motivating!
If you can do it, I've found that getting a professional business coach for each high performer who didn't get promoted can help improve their soft skills.
For those who weren't high performers but made it into the promotion discussion, well, you own that one! Nothing is worse than getting someone all excited about the possibility of getting promoted and then having to sit down with them to discuss why they didn't get it. It's best to be direct and just tell them they're not ready, but offer to meet after the process to discuss next steps.
It sucks to lose a promotion, but it's much worse to not get promoted and then feel like the organization has no plan for you.
The importance of challenging conversations
Managers play a major role in keeping employees engaged after a missed promotion. It can be challenging to have a tough conversation with someone who may be upset, but employees are more likely to stay with an organization where managers speak openly with them and show a willingness to work with employees to further their careers. The conversation may be awkward, but it's definitely worth having.