Depending upon whose account you've read, when Jack Welch ran General Electric, the company's performance appraisal policy was to fire the lowest 10 (or 15 or 20) percent performers.
All based on their performance appraisal numbers.
Welch's thinking was that, whatever that percentage was, those people weren't fulfilling what the company needed, so why keep them? Better yet, since all the employees knew that that would be their fate, they'd work all the harder to perform all the better all year round.
And because it was Jack Welch, organizations worldwide adopted the policy and applied it to their own organizations.
It doesn't work the way he thought. In fact, his was bad and counter-productive organizational thinking on two different fronts:
- Most appraisal-related numbers, no matter how hard management tries, are arbitrary, and
- By letting those folks go, you're adding costs to and losing opportunities for your operations and organization.
Here's how I know.
Numbers are numbers - even when descriptive words are attached to them. But the numbers and the words are still being interpreted by the person doing the appraising.
Is a 5 the same thing to you as it is to the rest of your colleagues? How about a 2 or a 3?
Do you all define, perceive and understand the descriptors the same way? Do the descriptors apply the same way across departments? Divisions? Corporate headquarters or a remote location?
How do you know?
Whether you're management or a first line employee, you're going to interpret the number, the description and the performance based on your own frame of reference. Yours. No one else's.
And, let's be honest, if you're in management, you're looking at your employees' performance through the filter of how your particular function, department or division is performing. After all, their performance determines the way that your performance is perceived by your management.
Managers can be trained and trained and trained again on the categories and criteria of the performance appraisal process - and you're still going to find inconsistencies across the organization.
You can't help it. Numbers and their associated descriptors are perceived and interpreted. That makes the results arbitrary - because an employee who performs the same way for two different managers is likely to be rated two different ways.
Now let's take it a step further. If you follow our friend Jack's advice and get rid of the 'lowest' performers, you've just dumped a percentage of your organization that has knowledge of how things are done - and how to get them done. You've lost specific expertise as well as the networks that those employees have developed to end-run problems, obstacles and any other form of dysfunction the organization presents.
So what do you do with under-performing employees? You ask questions. For example:
- Have they been trained for the job they're performing?
- When did that training take place?
- What did the employee think of the training?
- What was presented particularly well? What didn't fit or work?
- Do they understand what they're being asked to do...and why?
- Do they think that they're using their greatest skills?
- When do they feel they're contributing the most to the organization?
- How and when do they demonstrate those contributions?
What you're looking for is how to best utilize the knowledge, skill and experience that that employee already has - and then build upon it, whether in your department or another.
The more you know about your employees' skills, the more you can access and utilize them across the enterprise. Sure, it may mean that you're moving folks around - or changing and updating job descriptions. But the more you use the people you have...letting them use their greatest strengths...the more positive a culture you're building - and that translates to increased morale, productivity and profits.
This is not to say that there are employees who shouldn't stay with the organization. In those cases - because you already know who they are - it's your responsibility as a manager to take the necessary action. That way you become a hero for those of your employees (and you, too) who have been living - day after day - with the difficulties the truly problem employees create.
It's a win all the way around.
Please note that nothing expressed above constitutes legal advice.