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survival of the fittest?

Just been reading an article in zdnet week (www.zdnet.co.uk - unfortunately I can't locate the article on the web site). The article basically talks about redundancies at Siebel following disappearing profits etc...

"Although Siebel makes a practice of firing 5 percent of its staff every six months to eliminate weak performers and the hires replacements, this time it doesn't plan to fill the empty spots, the executives said."

Would you work for a company that had this policy? It sounds very different to hiring people with a 'trial' period and terminating if they didn't perform satisfactorily.

Pete Robinson
Tuesday, May 06, 2003

article in the paper copy that is ... before anyone asks... :)

Pete Robinson
Tuesday, May 06, 2003

No, I wouldn't work there.

Think about it:  Your coworkers are now your enemies, competing with you to make sure their above the 5%.


Tuesday, May 06, 2003

This is just bad policy.  It appears arbitrary and a terrible waste of money.  They have a guaranteed loss of 10% of staff * cost to recruit each year based on a false premise:  "People coming in will always be better than the people leaving."

I have seen this at other companies and here is my observation.  All departments get notified that all accounts need to cut back staff by 10%.  This seems acceptable at a higher level because "only the dead wood" is trimmed.  But that is not what happens.  Suppose group "A" has performers in the top 5%.  Group "B" has performers in the bottom 5%.  Both cut staff by 10%.  Was it a good deal for the company?  Or Jane is currently billed out to a project and Joe is coming off one.  While Joe is a better performer, he is not billable today.  "Sorry Joe..."

To me, this sounds like an attempt to overcome poor leadership.  People incapable of getting rid of true poor performers or evaluating a person's value to the business.  So instead, it becomes a "random act."  I would even predict that new people are cut far more often than people who have survived a year or two.  There is far less emotional baggage and they can claim the "newbies just aren't catching on..."

If Siebel believes this works, then it should be used at all levels.  Are they replacing board members every six months?  Presidents?  VPs?  I think you see the point.  I am certain they would justify it as "at that level they are proven performers."  or "Leadership is evaluated daily by the stockholders." , etc. 

Now compare their behavior to SAS and see the difference in outcomes.

Mike Gamerland
Tuesday, May 06, 2003

"Now compare their behavior to SAS and see the difference in outcomes"

You are suggesting that they should issue all staff with stun grenades and body armour? Hmm... on second thoughts...


Tuesday, May 06, 2003

I'm not so sure it's a silly idea.

I think implemented properly it can work - it certainly did at GE under Jack Welch, he had a policy very similiar to this. Basically, if you set yourself up as a company that has a culture of performance then it important to reward those people that perform and punish the under achievors. Of course it has to be fair, just and transparent and can be abused by poor managers. However, in the right company with the right management and the right culture I think it can be the right policy.

Yanwoo
Tuesday, May 06, 2003

This process is sometimes referred to as "ranking and rating".  The problem is not new. There have been one or two articles on it in EE Times, e.g., http://www.eetimes.com/career/newsfeatures4.html

It does seem like the the process could work in certain environments.  Perhaps in production environments where people are fungible and all you have to do is replace one production line worker with  another with comparable skills and production continues on as before.

I have come to think that, in large corporations at least, this is the management view of software development: hire people with the right skills, place them in front of a computer and they produce software.  As most people on this discussion board know, software development doesn't work this way.  I think this management concept is one of the basic problems of software development today.

mackinac
Tuesday, May 06, 2003

"if you set yourself up as a company that has a culture of performance then it important to reward those people that perform and punish the under achievors"

Like Enron?


Tuesday, May 06, 2003

I don't give one whit if Jack Welch did this or not. There are better ways to run a company.

The entire premise is based upon the fact that you are hiring the wrong people in the first place. Address that problem first.

Now, if you do have some deadwood slip through then deal with them on a individual basis.

This type of culture motivates people by fear, not by reward. Unless you consider continual employment with a company that will sack you at any moment a reward.

Mark Hoffman
Tuesday, May 06, 2003

The only thing 'similar' in what Jack Welch did was that people lost their jobs.  His policy wasn't ANYTHING like the one being discussed.

From http://www.mindfully.org/Industry/Jack-Welch-Toughest-Boss.htm :

I wanted to create a new contract, making GE jobs the best in the world for people willing to compete. If they signed up, we’d give them the best training and development and an environment that provided plenty of opportunities for personal and professional growth. We’d do everything to give them the skills to have “lifetime employability”, even if we couldn’t guarantee them “lifetime employment”. The speech I had to give 1,000 times was, “We didn’t fire the people. We fired the positions, and the people had to go.”

sjh
Tuesday, May 06, 2003

Another bad thing about the 5% rule is that it's probably not an objective assessment.  Rather, the 5% most politically unpopular people get the ax.

Doesn't matter if they were making the company money.

Doesn't matter if their replacements will be worse.

sjh
Tuesday, May 06, 2003

I work at a larger corp with the same kind of scheme - ranking everyone and 'helping' the top n % and planning to lose the bottom n %.

It really hurts morale.  It really hurts.

name and address supplied
Tuesday, May 06, 2003

Welch keeps preaching about getting rid of the bottom 10% of employees.
http://www.fortune.com/fortune/investing/articles/0,15114,370657-4,00.html

The world of big companies is foreign to me, so I can't secondguess this.  Then again, Letterman got replaced by Leno under his regime, so the man's competence is questionable.

Tj
Tuesday, May 06, 2003

I stand corrected.

sjh
Tuesday, May 06, 2003

I did work at GE and I was witness to this policy and I was eventually victim to it. It is about the worst HR scheme ever dreamt of in the history of business.

Year 1: Yes, there should be 10% of most workforces which are not up to par. So one might say the deadwood has been trimmed.

Year 2: Now, the new hires who replaced the original 10% cannot be effected since there hasn't been enough time to evaluate them. So let's say the new hires are "protected" for the first 18 months. We have to release the people who were not the bottom 10% in year 1, but at the 20% level.

Year 3: The new hires replacing the year 2 people are safe from evaluation and most of the year 1 replacements are still fairly secure because the vetting process only brings in people they think will do well. So, now most of the bottom 10% are those who were in the 30th percentile two years ago. But these aren't bad workers, not your best but still doing acceptably well. Morale of all their friends goes down when they see decent workers being shafted. Even worse, the best people on your staff with the greatest potential to go elsewhere, recognize this as a hostile workplace and start abandoning ship. From here on out, half of your turnover comes from the top performers too.

Year 4: The whole thing falls apart. Managers start to give false appraisals to protect their personal friends and they find bogus reasons to downgrade people who may be good producers but might just rub them the wrong way. They hire replacements who are sub-par to use them the following year as "cannon fodder" to protect the continuity of the core team. Morale has hit rock bottom since now even good producers are being moved to the bottom for purely arbitrary and capricious reasons and co-workers are stabbing one another in the back, not for advancement but simply to remain above the 30th percentile.

Yeah, dog-eat-dog Jack Welch did this. GE is now a truely lousey place to work.

old-timer
Tuesday, May 06, 2003

Some interesting points here.

>>"The entire premise is based upon the fact that you are hiring the wrong people in the first place. Address that problem first."

Perhaps. Although however hard you work to recruit the right people, judging cultural fit can be difficult and you're going to get it wrong. If people don't fit in they're out. What I like about this is that it's transparent - everybody knows the rules, they know what critiera they ranked on and they know if they don't meet that critiera they're out. Yes it is harsh, and it's definetly not perfect - but if you're good it's a good place to work.

>>"This type of culture motivates people by fear, not by reward."

To a certain extent, yes, however the type of people who suit this culture tend to be more driven by the reward than the punishment. People who are downward looking and worried about being in the bottom 10% are not suited to this culture.

>>"Rather, the 5% most politically unpopular people get the ax."

This is more of a good management/bad management issue. Within any system bad management will base decisions on the wrong criteria, so this is not a particular flaw with this concept.

>>"It really hurts morale.  It really hurts. "

I concede this is a real risk and a reason why it has to be used in the right culture. Using it in the wrong culture will result in damaged morale.

>>"I did work at GE and I was witness to this policy and I was eventually victim to it."

You obviously weren't suited to the performance culture and perhaps this is an example of how it has worked?? Your examples of how it has failed are real I'm sure, but are a result of poor management not a problem with the proposal.


Well implemented in the right culture with good management it can (and has) worked.

Something I always find strange on this board is that there is always the suggestion that there is one right way to do things, that one way is 'better' than another and that way is universal.

In my experience a company can be run well in many different ways, in different cases different methods and approaches are the 'right way'. There is no universal right way - there is just the right way in each individual case.

Yanwoo
Wednesday, May 07, 2003

It's one thing if the company has a policy that whenever layoffs are going to happen, they will cut the bottom 10%. But it is ridiculous to just deliberatley cut 10% every year.  The problem is that *somebody* will always be in the bottom 10%, no matter how good they are.  After some time, the replacements you bring in will be as bad as or worse than those you cut.

For example, let's say 10% of whoever you hire are slackers, and you have 100 people in the company of which 10 are slackers.  You kick out the bottom 10%, leaving 90 good people.  Then you hire 10, of whom 1 is a slacker.  Now you have 99 good people and 1 slacker.

Next year, you sack the bottom 10% again, leaving you with 90 good people. Then you hire 10, of whom 1 is a slacker. Now you have 99 good people and 1 slacker, and you are no better off than before. But you've spent money to hire and train these new people, and you've created a back-stabbing environment where people are more concerned about saving their own ass than helping each other.

The thing is that just by their sheer size some companies can afford to make huge blunders or have huge inefficiencies and still make big profits. Take Microsoft, for example.  They are very inefficient when you consider the number of people they use to develop anything.  But because of their size, they can afford to throw 100 programmers at a problem that a smaller company wouldn't allocate more than 10. They can also afford to have products or product lines that lose millions (can you say X-box?), yet still make a huge profit overall.  And of course, there are large bureaucratic inefficiencies in large financial institutions, which often causes them to have higher fees and worse service than the local neighborhood banks, and make it like hell to work in any of them.  Yet those large banks still make a profit. Maybe they survive only because their competition is also equally incompetent and inefficient in some other way.

T. Norman
Wednesday, May 07, 2003

Yes this is evolution in action, making sure that your staff are best fitted to their environment.

Unfortunatly the skills required are those of looking good to your immediate manager,  making yourself seem indispensible and making sure that there is always someone who looks worse than you.

This selects those people who are good at keeping their job, not those who are good at their job. The two sets of people are not necessarily the same, and in my experience rarely are.

JB
Wednesday, May 07, 2003

> What I like about this is that it's transparent - everybody
> knows the rules, they know what critiera they ranked on
> and they know if they don't meet that critiera they're out.

I can't agree with this. It's theoretically right, but it's completely disconnected from reality.

Often, not even the managers themselves have a firm grasp of the criteria, or how to apply those criteria, let alone the rest of the staff.

I've seen people getting rated for team work in environments where no project takes more than one IT element. The only basis for this was how well you related to your co-workers, not how well you worked with them.

> Yes it is harsh, and it's definetly not perfect - but if you're
> good it's a good place to work.

As JB pointed out, if you're good at doing what?
--

"Suravye ninto manshima taishite (Peace favor your sword)" (Shienaran salute)
"Life is a dream from which we all must wake before we can dream again" (Amys, Aiel Wise One)

Paulo Caetano
Wednesday, May 07, 2003

[Something I always find strange on this board is that there is always the suggestion that there is one right way to do things, that one way is 'better' than another and that way is universal.]

Well it all depends on your point of view and your idea of "the right way". If your idea of the right way correlates directly to your bottom line and profit margins then yes maybe firing part of your staff annually is good practice. If on the other hand you actually have a conscience and understand that a person's job is more than just a line item, it's their LIFE on the line, then maybe you wont implement this policy.

My point - not everything should be viewed through bean counter glasses and people are more than just bodies taking up space. Christ whatever happened to compassion and ethics in business? Are these things simply outdated? Will we move to a new level of evolution where a person's purpose is to serve the good of the corporation (but mainly the super-citizens)? If so then I am booking a one way ticket to Fiji.

Don't get me wrong, I just started a small business and understand the importance of good workers but this type of practice just plain smells bad and I am very suspicious.

Ian Stallings
Wednesday, May 07, 2003

Yanwoo,

On one hand, you say that it isn't realistic to always hire the right people, thereby creating the need to cull the deadwood.

But then you claim that these culling procedures require good management.

...and how realistic is that assumption?? Are you always going to have good managers that act selflessly and in the best interest of the company? Hardly.

So you can't have it both ways. Just as it's unrealistic to expect that the hiring process won't introduce deadwood, it's unrealistic to expect that management will always act in the best interest of the company. Old Timer's post perfectly describes how politics quickly poison a system like this.

Mark Hoffman
Wednesday, May 07, 2003

Unless the next batch of new hires is consistently better than those who were hired before, that method is mathematically guaranteed to give you a stagnant or declining quality of your workforce in the long run.  If management is good enough at it that they eliminate the true bottom 10% every time, after a few iterations the quality of who is left behind will be so high that the next set of new hires will be less capable than the group you're firing.  Once you've eliminated the slackers, with the next slashing you'll end up cutting good people and hiring more slackers.

If management is NOT good at identifying the true bottom 10%, they'll end up inadvertently cutting good people and losing many others to voluntary attrition.  Either way, the quality of the workforce gets damaged.

It's not even like evolution, because with evolution the next generation are descendants of the fittest of the preceding generation, so over time you get a fitter population.  But with that slash-and-burn practice, the next set of new employees are not descended from your best, so there is nothing in place to ensure a good chance of having better fitness in the next generation. The next generation of recruits is independent of the previous one.

Just because GE is very profitable doesn't mean this is a good practice.  Big companies can last for a long time while doing many of the wrong things.  They can afford to get away with mistakes and policies that would kill a 4-year-old, 100-employee company.  But their size doesn't guarantee they'll last forever.  Look at former mulitibillion-dollar corporations like Worldcom, Woolworth and K-Mart.

T. Norman
Wednesday, May 07, 2003

> It's not even like evolution, because with evolution the
> next generation are descendants of the fittest of the
> preceding generation

It worse, it's *devolution*. Think about the TV survivor show genre. All the basest human instincts of manipulation, maneuvering, in-fighting and betrayal become the norm. Civilized human behaviors honed through centuries of societal strictures are considered a weakness and simply discarded.

As for Yanwoo's assertion that perhaps I wasn't the type to survive in that atmosphere. It's only partly true. I survived in GE for more than 20 years. I finally reached the point where I wouldn't play that game any more and stopped fighting. The sharks ate me for lunch. It is sub-human behavior and I've been guilty of it as well.

I've been gone from GE 7 years, so if I sound bitter now you should have been around me a few years ago.

old-timer
Wednesday, May 07, 2003

It isn't usually good evolutionary practice for an organism to hack itself to bits because some bits were a bit slower than the rest.

This is becoming somewhat of a theme recently, the different conceptions of a company.  When I used to work for companies as an employee there was a large part of me that felt a part of the company.  Those companies I felt more a part of were happier and were more interesting.  They also tended to be more dynamic.

This wasn't just UK companies, DRI was a family company.  Tandon in the UK was a company of friends. 

This isn't some wishy washy hand wringing appeal for companies to be nice to its employees (I could never be accused of being nice), but rather more about realising that a company is its employees.  If a company cannot feed its employees, keep their families clothed and either directly or through taxation maintain its employees' health and well being then the likelyhood that the shareholders will make a good income are far less likely.

Yes, at times people will have to leave but be more careful of who you hire and those you fire will be fewer and less painful to the organism as a whole.

Simon Lucy
Wednesday, May 07, 2003

14 For the body is not one member, but many.

15 If the foot shall say, Because I am not the hand, I am not of the body; is it therefore not of the body?

16 And if the ear shall say, Because I am not the eye, I am not of the body; is it therefore not of the body?

17 If the whole body were an eye, where were the hearing? If the whole were hearing, where were the smelling?

18 But now hath God set the members every one of them in the body, as it hath pleased him.

19 And if they were all one member, where were the body?

20 But now are they many members, yet but one body.

21 And the eye cannot say unto the hand, I have no need of thee: nor again the head to the feet, "I have no need of you."

22 Nay, much more those members of the body, which seem to be more feeble, are necessary:

23 And those members of the body, which we think to be less honourable, upon these we bestow more abundant honour; and our uncomely parts have more abundant comeliness.

24 For our comely parts have no need: but God hath tempered the body together, having given more abundant honour to that part which lacked:

25 That there should be no schism in the body; but that the members should have the same care one for another.

26 And whether one member asuffer, all the members suffer with it; or one member be honoured, all the members rejoice with it.

1 Cor. 12:14-26

R C
Thursday, May 08, 2003

Phew, this is turning into an interesting debate.

>>Often, not even the managers themselves have a firm grasp of the criteria, or how to apply those criteria, let alone the rest of the staff.

That's down to the implementation of the method. It's critical you identify a small number of criteria which everyone throughout the whole firm is rated against. Without this it would cause the kind of environment that you suggest.

>>As JB pointed out, if you're good at doing what?

Good at whatever the firm considers important. That's not just bottom line beans, but other factors which are important in creating the right work culture (i.e. teamwork, learning, innovation or whatever).

>>Well it all depends on your point of view and your idea of "the right way".

You missed my point. I'm basically saying that your way is not right, my way is not right - there is no right or wrong. Personally, I would not implement this practice because it would not fit into the kind of company I would create.

I've been working on this 'how to build the perfect organisation' idea for about 5 years now. When I started out I figured (being a perfectionist) that there was one best way of running a company, there was a type of leader I needed to mould myself into, a type of culture, certain values and principals which would be the 'best .

However, I've learnt (as much as I've fought it) that there is no universal right or wrong way - there are lots of different ways to create a great company. Yes there are perhaps some very high level, general guidelines which probably need to be stuck to - but these never go down to the level of individual practices, which is what most of the business type debates on this forum are about.

Like this one. This could be a practice implemented in a great company, or not. It was an important part of the GE culture, one that attracted people who were driven by extreme achievement and weren't fightened to be judged. It's not directly about bottom line, it's probably not a short term cost effective practice, but it makes a clear statement about the GE culture - that it's for winners.

>>...and how realistic is that assumption?? Are you always going to have good managers that act selflessly and in the best interest of the company? Hardly.

I agree. Very tough to achieve but surely no company should ever stop trying to achieve this?? To accept that there's crap management in your company and to build practices around that fact sounds pretty pathetic. There is no reason why we should have to accept crap management - it's up to my (our?) generation (i.e. Thatchers Children)  to start doing things which will make sure this changes - and stays changed. I for one will never resign myself to accepting that management is poor and will always be poor.

Yanwoo
Thursday, May 08, 2003

"It isn't usually good evolutionary practice for an organism to hack itself to bits because some bits were a bit slower than the rest."

Actually this happens all the time.  And I'm glad you are not nice... otherwise you would be mourning all those cells that get destroyed and replaced in your body every second.

Organizations or other aggregates or no different... it just seems different when you are the cell that has to go.

Joe AA
Thursday, May 08, 2003

Stealing money is a great way to build your net worth short-term, as well.

The costs of interviewing and rehiring, as well as knowledge lost, ought not to be underestimated either.

"Do unto others as you would have others do unto you."

If we simply followed a few principles by the great religious teachers of all time, we would avoid so much destruction.

R C
Friday, May 09, 2003

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