Cutting the bottom 10% was popularized by GE in the Jack Welch era and is emulated by many, sort of. GE used a complete Performance Management system with constant employee feedback, there were no surprises.
What does your company do in the tough times?
Companies that do annual Performance Evaluations create a frustrating experience for managers and employees. Rewards are not instantly given and Negative feedback is built up and often cannot be easily traced to the instance. Managers often gloss over negatives to maintain a neutral work environment, which tends to cause other legal problems down the road.
Does anyone have info on the Disney performance evaluation 3d model?
Professor Cascio summarized it as follows :
Do : what do you do?
Display : what are
the results displayed?
Develop : what do you need to develop in the
future
We also watched a great Harvard Business Review video on “Au Bon Pain” (CEO-Ron Shaich’s interactions with his district managers) and managing your boss as taught by : John Gabarro & John Kotter.
Another excellent resource and quick read is : Malcolm Gladwell's "The Talent Myth" article published in the New Yorker. http://www.gladwell.com/2002/2002_07_22_a_talent.htm
He analyzes the McKinsey & Co stance on talent and superstar recruiting and development as used in Enron and demonstrates how narcissism is the least effective management style but is self-promoting. He finds that smart people are over-rated and the difference between top-performing companies' hiring philosophy was significantly different than the rest.
There is no correlation between IQ and career success, because those with high IQ often lack the EQ (emotional quotient) provides comon-sense, teaming, and sensitities to timing and presentation.
However, the ABC employee grading method used by Enron seems valuable for its simplicity. In conjunction, you reward performance significantly to the 'A' employees and half as much to the B's. The C's get zero and they get a development plan or a new assignment (maybe there is a better fit for them elsewhere in the company).
Additional references to Southwest Airlines, Wal-Mart, and the WWII navy are very interesting.
Our team presented a report on how/when/not to use Forced Rankings.
7 comments:
FYI - In over 20 years of corporate employment, I don't believe I've had a single performance review that actually helped me "manage my career", or provide anything really useful with regards to what and how to improve.
What's up with that?????
Why does this always seem so important, but we are always so bad at it?
Dan, the best boss I ever had just left my program. I was actually looking forward to our performance discussion this year, but he left before that ever happened. Now I find myself in the "boss free" zone, which sounds great, but who the hell is going to speak up for me when salary time comes around again next year? Perhaps I should move on to Dan's new program????
So...what are the hiring practices of the most successful companies?
The problem is - we too often hire people who want to be a Manager, but what they want to manage is a process. They don't want to, and most times can't, manage people. Technical, middle managers are the WORST.
I have experienced the Jack Welch / GE "10% forced ranking - shape up or ship out within 6 months" performance management system 3 times in my career at 2 major industrial companies. In 2 of the 3 cases I was laid off despite my sincere attempts to improve my "performance" to get out of the "lowest 10%" category. In the other case, I was transferred to another dept. within the organization where my skills & experience were a better fit and it worked out great. While this "10% System" is a great idea in theory, it isn't so hot in actual practice. The problem is that an individual's performance rating is more often based on manger's PERCEPTIONS rather than actual measured results achieved by the employee. As the saying goes..."One Aww S--t Wipes Out a 100 Atta-Boys!" Also it drives fear throughout the organization that you can be unfairly targeted if your mgr. dislikes you (or worse, if HIS/HER mgr. dislikes you). Talk to Mgrs. that have had to participate in the Forced Ranking consensus meetings in their depts. It is like a poker game....who've you got that we can push out?....don't come after my folks, they're all superstars?....this guy spoke out against our Domestic Partner Health Benefits policy - he's a troublemaker, let's get rid of him, etc.....You get my drift. Fear is NOT a good motivator, it scares off a lot of talented & creative people. Much better to work with all employees as needed on a regular basis (I say quarterly) to assess performance, measured results, fit with the organization goals, development needs expressed by the employee, etc. That makes people feel they are valued & trusted and not just a "number" or "resource" that could easily fall into the 10% pit of despair.
I agree Robin - there are so few managers who are good at the performance management thing, that the 10% forced ranking concept seems destined to fail.
Has anyone heard of a company that has been successful with this?
Yes this is very true, but an incredible new and permanent change is coming!
Management is still a relatively new concept; it was only created in the early 1900s and is a product of the military. Managers were paternal and information flowed in one direction. People were resources that were used in tightly defined responsibilities.
As the business world developed more creativity and entrepreneurship, it needed empowered employees that were autonomous to make decisions. With this autonomy, independence, and competitiveness came the personal drives for rewards and career paths.
Most managers are overwhelmed with the business analyzing aspects of the job. In order to stimulate and develop employees, we now have mentors to provide guidance and enrichment.
People are no longer the commodity of the 20th century, the U.S. (and old, wealthy countries) are facing a crisis of the shortage of people. With unemployment near the theoretical minimum of 4%, and the baby boomers poised for retirement, the workforce will be cut in half in the next 20 years.
Developing and maintaining labor will be a core competancy and competitive advantage for any surviving company in the near future. Today's managers are being taught as Robin recommends below :
-provide quarterly performance feedback
-take notes on each employee's development and performance progress to provide detailed performance management
Small employers are currently making the biggest strides in performance management. Corporations have greater resources to access employees and have more facets of the business that can be outsourced before they feel the absolute squeeze to revamp their human resources mgmt.
I hope that you can hang in the game long enough to enjoy this employment attitude shift. I think your last 20 years will be your best, where you will be the most valued.
Robin, I appreciate your shared experience. Those are two excellent points that should be highlighted :
1. Managers should not select the 10% cuts. This needs to be a team decision based on the skill mix and potentials that the group needs to perform well. Now, just because they cut a person, doesn't mean the individual isn't a prime candidate for another team.
Each person's attrition costs the company 1.5-2 times their salary in recruitment costs and you can add severance costs on top of that. Have faith in the HR selection process that the candidate was a worthy hire.
2. If managers do not document and exchange performance feedback quarterly, s/he is not developing her team. The annual review that can only highlight the one negative over the many positives comes across as a vendetta against the employee who is left feeling unappreciated.
3. If forced ranking isn't a fixed number assigned to specific departments, almost no manager will volunteer his/her staff to be cut. A manager recalls how difficult and lengthy the hiring process is when the budget comes back around to hire another person. It is counter productive to cut employees if there isn't an equal reduction in the work to be performed and will result in decreased morale and efficiency all around.
Robin, I hope that you can initiate or look forward to the new management styles that must learn to develop and retain each individual that can be obtained. You are certainly aware of the demotivating, demoralizing effects of the current methods.
The BEST PRACTICE of performance mgmt is 'Management by Objective' which is the most effective and take years to integrate in an organization. However, the AirForce Research Labs and Corning are said to be very successful models of this.
The next biggest factor of effective PAs is having management that realizes their highest priority is to develop their employees much as a coach or private instructor would. When managers provide ineffective annual appraisals and disparage the rating system, they should be evaluated in their 360 feedback.
In one survey of 324 companies, it was found that 51% use rating scales, 23 use essays, 17 use MBO, and 9 use something else.
Unsuccessful PAs are lacking in one of the following components : relevance, sensitivity, reliability, acceptability, and practicality. Dr. Cascio describes the efforts needed to overcome each component like frequency, judging performance not personality, setting mutually agreeable goals, using peer/customer evaluations, etc.
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