Employee evaluation time around many offices is the grown up equivalent to a student waiting to receive his or her report card. Some wait confidently to hear praise and receive raises or bonuses, others worry nervously, wondering whether evaluation is a new euphemism for termination.
In many companies, it has become exactly that. Jack Welch, the outspoken former CEO of GE has perhaps been the most vocal supporter of this sort of evaluation strategy, which he refers to in his autobiography as being cruel to be kind.
The meritocracy approach that Welch endorsed consistently rewards the top 20 per cent of all employees and dismisses the bottom 10 per cent. At PeopleSoft’s Leadership Summit 2002 in Las Vegas in April, Welch stressed the importance of being candid with employees.
“Make sure they know they’re your top 20, and tell the bottom 10 where they stand,” he said. “It’s a false kindness not to tell people where they stand. And it’s a sin to lose your best talent.”
At Cisco Systems Canada, the policy of “managing out” under performers has been the normal course of business for a long time, according to a Cisco spokesperson. The company’s focus has always been to identify and retain higher performing employees, which means that annually, Cisco purges the bottom five per cent of its staff.
“There’s no room to hide,” the spokesperson said.
Victoria-based Marilyn Harris, an associate at KLR Consulting and an expert in the area of IT human resources, cautions managers against painting their IT staff with the same brush as their sales or marketing or accounting staff.
“Generally speaking, the group of people who have become IT professionals tends to be motivated differently than other people within a corporation do,” she said, suggesting that profit-driven incentives might not always work as well as training or development courses would.
Cap Gemini Ernst and Young has developed an approach to evaluating its employees which involves holding management roundtables to measure employees against their peers. According to Debbie Fischer, the company’s director of human resources in Toronto, the process is appreciated by a majority of the company’s staff.
“People are very observant and will always question why management isn’t doing something about a low performer. Eager, strong employees often do carry low performers along, and to me it doesn’t speak well to the leadership of a company if steps aren’t taken. Inaction is not a course of action,” she said.
Craig Slaney, director of information technology for the Newfoundland and Labrador Department of Education and Department of Youth Services and Post-Secondary Education in St. Johns, said he recognizes the value in this sort of process, but stresses that before a company implements anything like it, a number of factors must be considered.
“Some people are perceived as high performers because of the work that the so-called low performers do. In a lot of organizations, the people who speak the loudest sometimes get the most credit,” he said.
He went on to say that while getting rid of the bottom performers has long been par for the course in business, deciding managers run the risk of axing the wrong person.
“You have to keep in mind that everyone has had a bad quarter or a bad year at some point,” Slaney said.
Nick Corcodilos, host of www.asktheheadhunter.com in Lebanon, N.J., agrees that deciding to annually terminate a percentage of employees is risky, both in terms of losing a quality employee and not finding a suitable replacement.
“There’s a huge fallacy in modern business theory that you can bring people up to speed quickly in a new job without expense. That’s nonsense and companies know this. Why not take the bottom 10 per cent and invest in what it takes to make them better? There will always be a bottom 10 percent,” he said.
Corcodilos did acknowledge that many companies have a lot of dead wood that deserves to be let go, and that this can be a relief for the remaining employees. The knowledge that some of those workers are being fired in a reasonable way can energize the good people in an organization and boost productivity, he said.
At Cap Gemini Ernst and Young, if the year-long process leading up to the roundtable is adhered to, no employee should ever be caught off guard by his or her rating.
“It’s a continuous process which our employees understand and are prepared for. The process itself is to help support what is important for us. It’s about giving good feedback to people, determining if they’re a right fit for our organization and helping those who aren’t to move on,” Fischer said.