Lesson #4. You should get rid of about 10% of your workforce.


Lesson #4.
Go into any company and ask a group of managers these questions:
How many of you have team members who are simply not pulling their weight?
Do you have someone on your team that you would prefer NOT to have on your team, based on the quality or quantity of their work?
Is there someone on your team who you could do without – or remove– without hurting your team’s output?

After the managers agree to several of the questions, and you calculate that the number of people to which they’d be referring amounts to about 5-10% of your total workforce, ask this question:
Why are we keeping these people?

While it’s impossible to have extremely high performers in every position of a company, it is a very unfortunate reality that within every organization performance varies significantly and you have many low performers who create ill-will because they contribute well below expectations.

Thus Truth #4: You should get rid of about 10% of your workforce.

What makes this truth even more frustrating is that it’s usually common knowledge who the hard workers are and who the slackers are. Co-workers know who produces and who doesn’t – and in a pure meritocracy the low performers would either be gone or would be paid substantially less than the higher performers.

But that’s the heart of the problem: most people in similar jobs are paid about the same – and in most companies it is extremely difficult to provide rewards that significantly differentiate between effective and ineffective performance. The belief that “C” and “D” players are “getting away with” sub-par performance is made worse by the fact that even when the performance is addressed, it is typically done (and should be)in a discreet and confidential manner.

Left unchecked the problem of great variation can lead to resentment and even a reduction in the performance of your top performers. I’ve seen instances where production increases by removing the 5-10% who malinger. This phenomenon can be explained by “Equity Theory”, an idea introduced by behavioral psychologist John S. Adams. Briefly it says we all compare our own workplace efforts and outcomes to that of others. Ill will builds when your ratio is significantly different from mine – especially if I believe you put in less work and get out the same amount of rewards or more. If I believe my inputs are greater than yours and we get the same outcomes, I’ll eventually either get fed up and leave or restrict my input to make our ratio of inputs to outcomes more similar. In other words, I’ll produce less if it looks to me like I’m doing more than you for no additional advantage or payoff.

How’d we get here?
A lot of factors contribute to creating and perpetuating these situations.

1. Hasty Hiring
“Act in haste repent in leisure”, the saying goes. Few decisions that you can make as a manager are more important then the hiring decision. And it’s hard to do….you’re trying to predict the future. Yet under pressure to fill a position, we often see managers select someone, despite concerns or reservations about a candidate, just to get a person in a position. This is especially true to when his or her direct reports are pressuring for a peer to help with the workload.

2. Fear of Firing
With so many horror stories and warnings of unfair dismissals, lawsuits and punitive action…people are afraid to let someone go even when the person is a clear and persistent underperformer. In fact, we are much more likely to see a person moved from position to position within a company, rather than being let go, which is an extremely short-sighted solution.

Lazy Management
Not addressing a difficult situation is the easy way out. If there are no differences in the consequences to a manager, s/he will choose to ignore performance issues if doing so is less unpleasant than holding an awkward conversation. If I have not been held accountable for my team’s performance, if I’ve never been instructed on how to do it, if I do not understand the potential problems that can be caused by failing to act, then i have neithe the willingness nor the ability to take any action.

What can we do about it?
You do not need to establish a full force top-grading regimen in your company to see improvement in your lower performers. By addressing the three causes described above you can go a long way towards “raising the bar” and lessening the variation in performance. Here’s a simple checklist that will produce real results for you:

Make sure your managers know the real dangers of allowing extreme variations performance to persist.
Teach your managers that the most important employment decisions they can make are who to hire. This point cannot be over-emphasized. If doubts exist about whether or not to hire someone – don’t hire – most times there are valid reasons to doubt.
Establish clear standardized company-wide processes for hiring and firing and teach your managers how to correctly follow them.
Teach everyone the art / science of effective interviewing.
Teach managers how to do collaborative goal setting and hold regular goal setting and goal review meetings.
Establish a metrics-based culture and set clear performance expectations.
Use collective (group) metrics to better link (evaluate) mangers’ performance to group performance
Conduct candid frequent (quarterly) 10-15 minute standardized goal-based performance management meetings. This provides regular ongoing communications, eliminates surprises, and creates more rapid performance documentation to support management decisions.
Separate pay increases from performance management meetings.
Establish a standardized series of steps in coaching and using your performance improvement plans.

These steps may sound easy, like Management 101, yet many fail to perform these fundamental steps…and until you do this in your company, you’ll just have to live with Truth #4: About 10% of your workforce should be gone.

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