Don’t Keep the Wrong People-They’re Costing You Money!

We’ve already discussed the Best Interview Questions (February 2011), How Job Offers are Not Created Equally (October 2010) and How to Prevent Bad Hires (September 2009). Those are all great before you make the hire. What happens when you discover that your team has some weak links?

According to Jack Welch, former head of General Electric, you routinely fire the bottom 10% of performers. Every year. But at the same time you actively promote the top 20%. The major benefit of removing the bottom 10% is that it forces managers to defend their talent reviews. Most companies out there have some form of evaluations, but probably 80% of them just put them in a drawer while the real decisions regarding advancement and salary are more impacted by who are friends with which manager. Rewarding top performers with a 200% greater raise than ‘good’ employees is also on Welch’s list. He believes in the 20-70-10 philosophy in that the middle folks are ‘adequate’, but should be watched.

While his managerial style has worked for not only GE but many other companies, it is not a catch-all for any firm or industry. There are different ways of measuring whether employees are worth keeping. In any company not everyone is equally effective and people want different rewards for their work.

Performance reviews are where we get the best insight into employees. Depending upon the questions that are asked, managers can best determine performance but also gain new insights into other issues that may be holding an employee back. Personal home issues, problems with (or jealousy of) fellow employees, issues with you (if they’re honest), or their perception of lack of career growth are all legitimate reasons for stumbling. You now have important and employee career-making (or breaking) decisions to make based upon how easy those remedies are.

During employee appraisals, managers need to rank their performers (honestly). It’s not about friends, nepotism, etc. It’s about who gets the most results with the least push-backs. The two things that the manager will realize is 1) they identify the high-performers which they could NOT do without, and 2) which are the lower performers that they have been making excuses for all this time.

Think about a problem employee or a lower-performer. Do they seem to like their job? WWJD? No, it’s not the famous acronym, but ‘What Would Jack Do?’ Mr. Welch would give them a second chance. It’s difficult to find the passion in some people. But if you are able to find people who want to succeed, are honest and who are apparent ‘company people’, then they deserve to be given the right training or motivation to get them to that level. Withholding that or dumping them does no one any good. Those future good or outstanding employees will look back and (hopefully) thank you for believing in them.

What happens if your ‘bottom’ performer is really in the top 25% when compared to a competitor? Would you really want to fire them? Should you really part ways? That’s why measurements must be used carefully or you may lose out on someone who will make the next company more efficient, more competitive and perhaps more money.

Sometimes no matter what you do, you just can’t make everyone happy. Whether it’s the money, the commute, or whatever, at some point you just have to make the decision that separation is in everyone’s best interest. You may be doing your entire organization or division a huge benefit. This will come from 1) relief (or shock) that the offending person is now gone and/or 2) realization from other employees that you are serious about ridding your company of non-performers. The former will foster harmony and will allow the remaining employees to focus on important issues. The latter will create an environment in which there is an awareness that you mean business. This will also ‘motivate’ your employees to get back to business; and unless you are running a charity, this means getting back to making you and the company money. That’s really why we’re all doing what we’re doing, right? If that lottery thing still hasn’t given you that golden ticket, then we are obligated to do what’s best for our employers and even what’s best for our employees.

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