Laura’s Winning Ideas

Jeffry Pfeffer of Stanford University’s Graduate School of Business wrote a piece in Business 2.0 last October which I saved to comment on, The Myth of the Disposable Worker.

(I just found it at the bottom of a “when you have a moment” pile on my desk.)

He ralled against advocates of high turnover, the folks who advocate forced ranking and firing the lower 25% each year.

That approach seemed nutty to me when I first heard it, and even nuttier now that I have a couple of friends who’ve worked inside GE, the most famous bastion of Forced Ranking.

In disfunctional organizations, I see high turnover in their proposal teams. One VP bragged to me that these people were disposable and so he didn’t worry about including them in the firm’s development programs, or training.

When this approach is used, the firm will gravitate to the median, not aspire for top performance. Here’s why I come to this conclusion:

If you know that your review must keep you above the criticism point, you spend more time on internal politics than you might if you weren’t under this threat. You also behave in ways that will avoid upsetting anyone or any department that could rank you low and thus get you fired. You don’t take any chances. You work at staying under the radar.

This atmosphere is the opposite of those organizations in which folks are engaged, and willing to do whatever it takes to get the job done. In the powerful organizations, people know they can exercise good judgement and make the extra effort. They might not succeed every time, but they aren’t afraid the attempt will doom them.

It is quaintly Theory X(1) to believe that fear is productive in the workplace. When trying to get your Millienium generation employees to engage, this could be especially counter-productive. “Nothing to gain, nothing to lose.” is the motto of many in this generation. It’s a challenge to engage them, and I don’t see this approach being successful.

Sometimes you make a hiring mistake and the sooner you correct it, the less pain for everyone. But if you are dismissing a significant percent of your work force each year, just where do you think you’ll be getting the next batch of victims?

(1) - Douglas McGregor’s XY Theory

Theory X (’authoritarian management’ style)

- The average person dislikes work and will avoid it he/she can.
- Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
- The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security above all else.

Theory Y (’participative management’ style)

- Effort in work is as natural as work and play.
- People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
- Commitment to objectives is a function of rewards associated with their achievement.