I find mgmt often has a tough time communicating #1. There is a fear of acknowledging that some people work better than others… Ironically, I don't often see lasting negative effects at the employee level. Since school—when GPAs were openly published—they've learned to deal with forced rankings. Even many of the Gen Ys I work with who didn't get that stuff in school CRAVE honest feedback in the workplace.

So managers, the faster you can develop the courage to tell it like it is, the more trust you'll engender and the easier it'll be to manage through the tough times.

I can't tell you how many times that slush fund has been referenced in my discussions with employees. Many don't trust that their executive management team is also paid for performance.