David, who was just promoted to manage a small medical transcription department, has inherited a problem. His predecessor recently completed the staff’s annual performance evaluations, and it is now time to distribute annual raises based, in large part, on these evaluations. Of the seven employees whom David now manages, all received fairly strong evaluations, mostly in the “above average” range, although none received the highest rating of “excellent.” The budget for David’s department will not be growing much for the next few years, and there is very little room for salary increases. Had any of the employees achieved the highest performance level, David might have been able to apply for extra merit pay funding, but this does not appear to be an option.

Because all seven employees received relatively strong evaluations and there was not much difference between the highest and lowest performers, David has decided to allocate the raises equally among them.

However, these raises will probably be disappointingly small. David is trying to decide how to break the disappointing news to his staff in the least demotivational way possible. He is weighing the following options:

1. Explain to the staff that they deserve larger raises but, given the long-term departmental budget, this was the best he could do for them.

2. Explain to the staff that he could have gotten them larger raises if their performance levels had been higher.

3. Explain to the staff that they deserve larger raises and that he, as their manager, failed them by not doing more for them.

4. Explain to the staff that these raises are fair, given their performance levels.

Discussion Questions
1. What attributions are being communicated in each of these explanations? Are they internal or external? Are they stable or unstable?
2. From a motivational standpoint, what potential pros and cons do you see for each of these explanations?
3. Which of these four options (or which combination of two or more) do you think would be the least demotivational for the staff? Why?