A manager sits with an employee during their appraisal and shares their performance rating, walking them through why it was given and what to improve it. The employee walks out of the discussion, feeling grateful for the rating and the feedback given, thinking the process was all but over, pending the final letter from HR.
Weeks later, when the letter arrives, the employee is shocked to find that rating shown to them during the appraisal is not the same as the one on the letter and that they have been denied the salary raise which should have come with the earlier rating.
Unknown to the employee and their current manager, another person who had a dotted line reporting relationship to the employee took it upon themselves to reach out to HR and change the rating citing performance issues.
This issue happened in an organization that was mature enough operationally.
With growth, comes uncertainty
When an organization is small, say fewer than 50 people, the clarity on who’s responsible to take what kind of decisions is simple enough. Generally, the control on most decisions rests with the one who signs off on the paycheck in the early days, usually the founder and/or the founding team. They would have the bandwidth to do that, because no one is more vested in the growth aspect of the company and having direct control of decision making is actually a good thing at that stage.
With growth, comes increased complexity on all fronts. Starting with headcount, which makes clear communication that much more critical and difficult, visibility on issues diminishes going both up and down, confusion increases on who is authorized to make decisions on key issues and hierarchical paths begin forming independently outside of org charts based on perceived authority. And when issues come to a head, short of the founder stepping in by escalation, people generally opt to go for consensus driven decision-making.
With uncertainty, comes friction
One might think, “Why is this such a big issue? Aren’t people hired to take the place of the founder and get delegated that authority to make decisions on their behalf?”. That point of view is quite understandable. After all, that is exactly what growth is supposed to bring, distributed authority and workload, enabling exponential increase in output and focus.
What generally gets missed, surprisingly, is that we are dealing with people, not machines that simply follow rules they are given. We underestimate the inherent resistance to change. Those who have been in a small working setup could walk directly to the founder’s desk and get a decision done in five minutes. When the time comes to grow, and they get placed under a different leader, the friction arises immediately. Since the direct decision making is now routed through another person, a lot of other factors come in play, including not only trust deficit and uncertainty but also various grades of resentment, mostly unexpressed.
With friction, inertia surfaces
This resentment is not very difficult to detect, except in subtle cases. When things don’t go their way, people simply go around their immediate leadership layer. Decisions that a leader had deferred or is still deliberating on get escalated under the guise of urgency and basically, they have that decision made for them.
One of the most visible signs of impaired decision making comes from the founder and leaders themselves. At a certain stage of growth, leaders will be absolutely pulled into tasks that they are not cut out for or may not relish. But getting through those is part of their individual growth paths. One might say that a founder should continue to focus on sales and/or product design as a key to success, but focus doesn’t mean decisions remain bottlenecked on them.
As the organization grows and layers of leadership get added, if the delegation is being done only on routine tasks while the more creative or even functional decision making remains with the “old crowd”, then the organization isn’t really “growing”. It is not taking advantage of the diversity of experience and skills that is being brought in by other leaders. The halo effect, “We built this, we have been right before. Our call on this new decision is probably better.”, just makes it worse by ensuring that communication doesn’t flow where it is needed in a timely manner.
Knee jerk reactions won’t do
The usual reaction to these problems would be to build a RACI chart or a better organizational hierarchy. Some will put in a thoughtful and comprehensive culture and code of conduct documents as well. Few will take things more seriously and go for structured awareness trainings.
But no frameworks or training would be effective if the people who are supposed to follow them neither understand the true intent behind those nor have accepted the reality that growth means change, for themselves and those around them in the organization.
In the issue of the modified rating, several things went wrong. No communication was made with the direct managers. No discussion was had with the concerned employee. But beyond all that, one crucial aspect of management was broken. A decision was made by someone who shouldn’t have made it on their own. No one from HR flagged it as a violation of trust and even ethics.
Course Corrections
What would have prevented the problem with the changed employee rating from happening? Quite a few things.
Avoiding unnecessary dotted line reporting in the organization, conferring with all involved stakeholders before deciding on the final rating of an employee, reading in the current manager of the employee when the push for rating change came from a stakeholder. And the obvious one – good, timely judgement from the involved stakeholder – is indeed valid, but it is a wish and not something we can apply as a process solution.
It might look like none of these really need any structured training but seeing how professionalism has been eroding in the era of quick results, making people rooted in higher standards of work has become more of a necessity.
Moreover, these are not just meant for only a mature organization. They are crucial for growing ones as well. It also indicates that operational maturity is not something that can be indexed to a single number throughout the organization. Where certain areas of work might have been streamlined very well, either by design or by learning, other areas would not have matured equally and remain the weak link in the operating system.
Fix as you grow
Start with your leadership development programs. Roll out continuous but short, real-scenario based discussions instead of generic training. This will help give them full visibility on the context so that your leaders can recalibrate what to act on, when and how.
In addition to avoiding unnecessarily complex reporting structures, build mandatory internal check loops for sensitive calls. Escalations that bypass layers should trigger quick identification and reconciliation. Track simple health signals like escalation patterns, fairness perception, decision-to-communication time and fix lagging areas locally.
More importantly, address the people directly on the changes that happen from growth, keeping them updated as the layers get introduced, guiding them while they acclimatize to the changes. In parallel, founders must visibly demonstrate that their next level is not just for show or to handle overflow. Call out any quiet bypassing and resentment early on, instead of ignoring it or worse, acting on it without all stakeholders being involved. As the layers get added, make decision rights clear with lightweight maps for performance, promotions, budgets, and priorities, revisited quarterly.
Growth reveals where we mistook control for leadership. The organizations that thrive treat delegation as real ownership, with the trust, friction, and corrections it demands.
Get this right early in your growth, and stories like the altered rating will stay as cautionary tales, and not become your reality.