The Chemistry of Strategy tm Newsletter August 29, 2013

Be careful when ranking employees

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What do GE, Microsoft, and Enron have in common? They all settled on a rank-and-yank employee management model. Jack Welch's lasting legacy is that 60% of the Fortune 500 companies use a variation of his concept of firing the lowest-ranking 10% every year.

 "A" players get all the goodies. "B" players get to keep their jobs. "C" players are shown the street. As the movie's sales manager in "Glengarry Glen Ross" said: "First prize is a Cadillac Eldorado. Second prize is a set of steak knives. Third prize is you're fired."

What could be wrong with such a widely adopted model? There have been a number of articles outlining the negative effects of this program. Enron employees hid losses and cheated to create the appearance of high performance. At Microsoft, employees made a dramatic negative impact on company performance by hiding key information and sabotaging co-worker's projects to improve their own personal rankings.

It is true that on average, 20% of an organization's employees will create 80% of the value and a different 20% will create 80% of the challenges. But is that necessarily because you have "good" employees and "bad" employees?

There is a better approach than the zero-sum ranking of employees against each other. Have each employee rank themselves against their job. Employee performance directly relates to their job fit.

How passionate are they about the work they do daily? Do they lose track of time on the job, have an urge to get to work early, get excited about what they're working on? Is the job in alignment with their personal needs? Does the schedule conflict with their family obligations? Is there enough or too much training? Is the commute burdensome? How competent are they in the job? Do they regularly deliver on time? Does their work rarely need to be checked or redone?

Ideally, an employee would have the insight to recognize when they are in the wrong job and initiate a move on their own. More often than not, the responsibility of making sure the right people are in the right seats falls on management.

Create a strategic plan with your team

"Management is doing things right,
leadership is doing the right things." -Peter Drucker

Strategic development of employees is a key aspect of a company's long-term health. Your strategic plan clarifies the current and future organizational needs. The best way to raise, understand, and balance these issues is through a facilitated, team-driven strategic planning process.

How long have you been saying that you are going to develop your strategic plan, but you haven't yet done so? Why? Perhaps it remains on your to-do list because it feels like a huge, laborious process and you haven't the time to spare to do it. Peak-performing companies have a clearly defined strategic plan…and it doesn't have to take long to create an effective one.

Your executive team costs you over a million dollars a year. Are you fully utilizing them? It's a waste of time and money to create a plan that they don't own and implement.

John W. Myrna

is co-founder of
Myrna Associates Inc


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John Recommends

Big Wave Surfing
by Kenneth Thurber

"The people who made buggy whips for a living eventually ended up without jobs due to technology changes. But could they have evolved to a different type of work? Can you make a thirty- to forty-year career plan when the whole world changes at a rapid rate?"

This book takes a fresh look at technology and innovation and how you and your company can identify and ride the next great wave.


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John loves to share his insights. Email him if you'd like to have him speak at your next meeting.
success@myrna.com


Published Articles

"Hire Based on Attitude, Aptitude, and Chemistry" published by The Conference Board
Read it Here


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Nestle USA
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