Ask Annie: Do I fire the bottom 10% just because Jack did?
A 'rank and yank' system like GE's is based on a bell curve. It assumes a random sampling, which a company is not.
By Anne Fisher, FORTUNE
Sept. 2, 2002 issue
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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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