Most organizations allow employees to use some degree of discretion¹ (i.e., use their own judgement) when making hiring, promotional, and pay decisions. I have noticed a trend in several of my recent investigations, which is that the exercise of managerial discretion became a source of friction and conflict, with people thinking the exercise of discretion was biased or unfair. In this blog post, I examine some of the benefits and problems that managerial discretion can bring to an organization and share how I approach investigating complaints that arise from its use (or misuse). I also provide suggestions for how organizations can avoid such complaints.

Empowering those in a managerial or leadership role to exercise their discretion when making hiring, promotional, and pay decisions can have many benefits. It allows them to use their knowledge, experience, intuition, and judgement to guide and inform their decision making. This can enrich the decision-making process and make it more flexible by, for example, allowing for the consideration of factors that were not foreseen to be relevant at the outset of the decision-making process, but which later turn out to be important. When it comes to assessing employee performance, a paper published in the Journal of Management Studies promotes the exercise of managerial discretion, making the point that an employee’s contributions to an organization can be difficult to quantify through formal measurements alone.²

However, problems arise when a decision maker unfairly exercises, or is seen to unfairly exercise, their managerial discretion. Biases, whether intentional or not, have the potential to arise when decisions are made in the absence of standards or pre-existing criteria.

Indeed, in the investigations that I recently conducted, the exercise of managerial discretion was alleged to have been tainted by bias, discrimination, and/or favouritism, resulting in unfair or discriminatory outcomes for the employees involved. Felicity Menzies, a diversity and inclusion consultant, expands on the different forms of bias that can arise in performance appraisals, such as affinity bias (favouring your own social group over others), recency bias (favouring recent performance information over older information), distance bias (favouring people geographically nearer), and central tendency bias (a tendency of scoring towards the median). She also discusses the consequences this kind of bias can have from an organizational standpoint, including damage to employee perceptions of their worth and value, disengagement, and even resignation from the organization.³ I add that, even if bias appears in perception only, such feelings of injustice and unfairness can spread throughout an organization, possibly affecting morale and creating a toxic workplace, if not properly addressed.

How do I approach investigating such complaints?

My objective when investigating these types of complaints is to understand how the decision that is allegedly problematic was made, who, specifically, was involved, the degree of managerial discretion they had, and whether they exercised that discretion properly. I collect hard evidence, such as notes and evaluation reports made by the decision maker, as well as oral testimony from the parties, including any other decision makers that may have participated in the process. If only one person was responsible for making the decision in question, I would be more alive to the threat of bias impacting their decision, but I would also consider whether others had the opportunity to influence that decision, and whether that was appropriate. I also consider how the criteria used to make the decision were created and look for consistency of application. In a recent investigation of mine, a complainant who alleged there was bias in a hiring manager’s decision questioned why a job competition emphasized a particular skillset, when in past competitions that emphasis was absent.  Across allegations of favouritism, bias, or discrimination, a telltale sign of an unfair exercise of discretion is any instance of unequal treatment — namely, people in similar situations being treated differently or held to different standards.

Reducing or eliminating complaints concerning the exercise of managerial discretion

Here are some things employers can do to avoid the pitfalls associated with the improper exercise of managerial discretion:

1. Remove the element of managerial discretion

A workplace can minimize the risk of real or perceived bias, favouritism, discrimination, etc., if they introduce rules that remove the ability of a decision maker to exercise managerial discretion. For example, organizations may require certain minimum qualifications in a hiring process as a means of limiting or removing managerial discretion when it comes to “thinning the crowd”. Unfortunately, an increasingly common and unintended consequence that can occur with requiring certain mandatory qualifications is that they may favour certain groups, privileged with greater access to those qualifications, thereby systemically discriminating against historically marginalized groups that have had less opportunities towards attaining those same qualifications.  Organizations with a stated goal of recruiting or attracting more diversity through members of certain equity-seeking groups may wish to preserve managerial discretion and maintain some flexibility to otherwise rigid requirements.

2. Limit the degree of managerial discretion

A hybrid approach, where managerial employees are allowed to exercise some discretion within defined parameters (such as a policy directing or limiting the exercise of discretion), is another option that avoids tossing the proverbial baby out with the bathwater. For example, candidates in a job competition can be scored based on a decision matrix⁴ of preset categories and questions. My colleague, who wrote in her blog about the practice of tokenism—a concept  intrinsically tied with racial bias in hiring—argues that organizations can structure policies and processes to avoid bias and unconscious bias, such as having a panel of interviewers and/or cluster interviewing.⁵ Issues can still arise with a hybrid approach, as employees may still feel that the person exercising their limited discretion is able to manipulate the outcome unfairly.

3. Be transparent

One final recommendation I have is for employers to be transparent about the exercise of managerial discretion, namely by sharing information with employees about the criteria that are used in decision-making processes or the reasoning behind these decisions. Across some of my investigations, the decision makers had reasonable justifications for their decisions, but failed to communicate these with staff members in a clear, consistent manner, leading to a perception of bias. My takeaway was that communication about decision-making processes not only must be done; it must be done well to achieve the transparency needed to combat perceptions of bias or unfair treatment.

These suggestions are not a panacea for avoiding complaints, however, limiting and transparently outlining the boundaries for the proper use of discretion can assist in reducing the number of complaints, or can assist investigators in quickly identifying areas where managerial discretion was improperly exercised, resulting in quicker, simpler investigations.

¹ I refer to this specific exercise of discretion throughout the rest of my blog as “managerial discretion,” but note that the themes and problems I discuss can apply to a broader range of discretionary decision-making processes in the workplace across all levels of employees.

² Rebecca Hewett and Hannes Leroy, “Well It’s Only Fair: How Perceptions of Manager Discretion in Bonus Allocation Affect Intrinsic Motivation” (September 2019) 56:6 Journal of Management Studies  1106-1107.

³ Felicity Menzies, “Eliminating bias from performance appraisals” (June 27, 2021), online: LinkedIn <https://www.linkedin.com/pulse/eliminating-bias-from-performance-appraisals-felicity-menzies-fca/?trk=read_related_article-card_title>

⁴ Typically, this is a scoring/evaluation sheet to rank and compare candidates.

⁵ Chantel Levy, “Tokenism is not the Ticket” (August 30, 2022), online: RT <https://rubinthomlinson.com/tokenism-is-not-the-ticket/>

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