Do I Fire the Bottom 10% Just Because Jack Did?
(FORTUNE Magazine) – Dear Annie: I own a software company that has grown in the past ten years from 16 employees to 460. I recently hired a human resources manager who is a big fan of Jack Welch and is proposing that we evaluate our people by putting in a GE-style ranking system that would involve, among other things, getting rid of our "bottom 10%" of employees. I'm hesitating because, for one thing, I hired almost all of these people personally, and I think they're all pretty darned good. But let's say we could identify the bottom 10%. Wouldn't firing them just give us a different bottom 10%? Where does it end? What are the pros and cons of these ranking systems? --Unconvinced
Dear Unconvinced: Your misgivings are well placed. First, there's a methodological flaw in a "rank and yank" system such as GE's. It's based on a classic bell curve, wherein the vast majority of people will invariably fall somewhere in the middle. But a bell curve is a statistical tool that assumes a random sampling, which a company is not. Moreover, insiders at GE report big morale problems arising from what HR types refer to as forced ranking: Many employees are understandably vexed at the sight of performers who are, as you say, "pretty darned good" being pushed out simply because the system dictates that someone has to go.
You don't say what method, if any, you're currently using to evaluate your employees. This is important, because forced ranking only works--when it works at all--if there are clear, objective performance criteria already in place. That's true for two reasons, says Byron Woollen, head of New York City-based Worklab Consulting: "First, without clear performance standards and expectations, the decision on who is in the bottom 10% is left up to individual managers, whose judgments can quickly become--or at least be perceived as--political and capricious. And second, just ranking people without a specific idea of the basis for the ranking really doesn't tell you anything about whether, or how well, people are meeting your company's goals." An example: Suppose you rank your salespeople and find that each of your top 10% sold $800,000 worth of products last year. That's swell--unless you needed everyone to be selling $1 million for your company to prosper.
But, you may be wondering, if we already have performance-evaluation standards and managers whose job it is to make sure we meet them, then why do we need forced ranking at all? Maybe you don't. "Forced ranking is often a quick fix for a situation where managers are just not doing their jobs properly--either because the culture is too averse to conflict or oblivious to market realities, or for some other reason," says Woollen. "Ideally you want to take a hard look at those issues before you say, 'Okay, let's just rank everybody.' " Woollen, who has worked with dozens of companies that have tried it (some more successfully than others), says that rank-and-yank is "like using steroids vs. working out. Steroids are easier, and either way will make you buff in the short run. But which way is better for your long-term health?"
If you do decide to go along with your HR manager, a couple of suggestions: First, go to www.worklab-consulting.com (click on iq) and read Woollen's thorough and balanced white paper, "Forced Ranking: The Controversy Continues"--not least for some valuable tips on the importance of explaining the system to your troops in such a way that they won't rebel. And second, before you dump your bottom 10%, consult a good labor lawyer. Last November, Ford Motor had to shell out $10.5 million to settle a class-action suit brought by employees (most of them older white male middle managers) who had been ranked and yanked. Ford dismantled its forced ranking system last July.
Dear Annie: I'm looking for a new job, and I'm considering using one of those resume-distribution companies where you pay about $100 to have them send your resume to thousands of recruiters. But what do you think? Are these services any good? --Shortcut Sam
Dear Sam: Says Peter Weddle, Internet job-hunting guru and author of Weddle's Job-Seeker's Guide to Employment Web Sites 2002 ($14.95, at www.weddles.com): "There are good ones and bad ones. A bad one will flood recruiters with resumes they don't want and can't use." Three that Weddle recommends are ResumeZapper.com, ResumExpress.com, and ResumeAgent.com, but if you're considering some other outfit, you can evaluate it by going to the website and clicking on FOR RECRUITERS. If headhunters signing on are allowed to fill out a profile of the kinds of resumes they're looking for--including such details as candidates' area of specialization, length of experience, industry, and geographical area--then Weddle says the odds are good that yours will find its mark.
Dear Annie: I'm 14 years old and have been working on the grounds crew at a local country club. I've spent about eight days on the job and showed them what a hard worker I am. However, I don't think I'm ready to work yet and I want to quit. Will this look bad on my resume? Please respond soon. --Mike
Dear Mike: You're 14, you read FORTUNE, and you have a resume? Wow. If I were you, I'd relax and take it easy. No future employer will hold it against you that you wanted to be a kid for a while longer--or at least until you're legally old enough to join the toiling masses, which in most states is two whole years from now.
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