Barrier:
Performance Evaluations

Yes, it is traditional for professional service firms and the corporations that ape them (GE, Ford Motor, Conoco, Sun Microsystems, Cisco, and many others including, of course, Enron and EDS in their day) routinely to force-rank their people and fire a fixed percent–the “worst of the best”. This destructive search for weakness is called an up-or-out policy. And yes, in his 2001 memoir Jack: Straight from the Gut, Jack Welch (GE’s former CEO) strongly advocates the practice. By the third year of forced firings, “it is war” he boasts.

But firing underachievers is not quite the same thing as creating a high-performance organization. What kind of a manager wants to face having to identify his or her lowest-ranking subordinates every year and chose which to fire? Perhaps someone like Henri Christoph, the self-appointed “King of Haiti”, who used two hundred thousand slaves to build a replica of Louis XIV’s Palace of Versailles at Milot. When work didn’t proceed at the pace he wanted, he followed the Roman decimation technique, butchering every tenth man in a long line. After which construction would pick up, and now with only ninety percent of the workforce to feed.

It is also worth noting that tenure paths in academia work similarly.

The problem is not just that such comparisons are odious but that they lead to distinctly pathological behaviors. In many consulting firms, for example, it is unsafe (career truncating) to concede that the service you deliver is ever anything less than mythically stellar. Continual declarations of ill-founded victory set up crises of integrity in the individuals involved. Moreover, while these practices certainly create intensity and dedication (nothing like the sword of Damocles dangling over your head to do that), they also inhibit the type of flexible and creative thinking that is only possible where lighthearted people are having fun.

Most disturbingly, such socialization mechanisms create a cult-like environment. If academics are the theologians of the religion of management then consultants are surely its priesthood. In a backhanded way, this may explain why these same conformist consultants and academics’ display such an extraordinary yearning to be heretics (mavericks), as evidenced by this site. So which god of management shall we dish today: power and wealth (vanities), governance (accountability – you have got to be joking), excellence (bugger humanity); control (you wish), people (sugared words) and so on?

My build? The global financial crisis has clearly exposed the woeful inadequacies of economics. It is time to come out about the disastrous consequences of the rest of our management religion. Perverse socialization rituals like McKinsey and other’s up-or-out policies are as inappropriate in our world today as female circumcision. Saying so is the place to start.

I am sure McKinsey didn't invent up-or-out. Marvin Bower probably picked it up from the law firms.

This is a critical barrier to tackle. I fully take your point that transparency and openness are two keys to a positive, productive, and creative culture. I wonder, though, if there's a third way between brutal forced rankings and a paternalistic "hire for life" approach. Do you have any organizations in mind that have created a great system for finding the right great people--and keeping and unleashing them?

Funny, I made a similar suggestion here: http://www.managementexchange.com/content/killing-charade-spawned-annual...

Neil - great point and I do agree. The current system of performance evaluations really impedes teamwork and collaboration. Here is an article you might find interesting http://online.wsj.com/article/SB122426318874844933.html

This phenomenon was summed up in the little-known Waltz-Yablonski Paradigm of Corporate Suckritocracy:

'There is no solution. I just want my slice of the problem.'

As Geoffrey notes, forced firing of underachievers is not the same as performance improvement. Far from it, in fact, because perceived "achievement" is often a perceived state rather than a concrete fact. As the quick-witted Edith Waltz and Mike Yablonski observed, some organizations heap rewards on those who are most effective in 'sucking up' high-profile opportunities and taking credit for successes accomplished by others (thus the term 'Suckritocracy'), while casting doubt and blame on those who focus on getting the job done.

Skillful 'operators' will survive and thrive in brutally competitive cultures, but at least there is a new technology (TGI Role-Based Assessment) that can predict the quality of a person's behavior when working with others to achieve common goals.

Agreed, I think forced ranking are misguided. I don't think a job-for-life is the right answer either though. I understand and appreciate the intent of an up-or-out culture, but you don't want to corrupt a collaborative collegial environment in the process.

One part of the solution is doing away with the annual cycle and giving feedback more frequently and closer to the actual instance of the behavior to be encouraged or improved. Another is making the process more peer driven. Concentrating power in that way promote pandering and sycophancy; decentralizing it promotes team work and collaboration. Why not do away with hierarchy altogether and redefine what it is to advance "up?" We tried to address some of these very issues with our just-in-time teams hack: http://www.managementexchange.com/hack/just-time-teams

What matters isn't how everyone ranks but would you hire this person again? If not, then terminating the relationship is in order. If so, just maybe not in this role, take advantage of the opportunity find a better fit.

My mind is constantly consumed with the idea that management thinking is a system and that systems need to be in a dynamic balance so that an optimal solution can be found. When one end of a system is artificially held constant, then the other will balloon and throw the entire system out of kilter.

Welsh's efficiency idea of a peer review system to expose and eject laggards is one system and as effective as it is, it can also destroy value when not counter-balanced by something else that holds its action in place. The real issue you raise is a crisis of axiology or simply stated defining what is the highest value people aspire to. What is valued by the organisation? What is valued above the value placed on the sustained operation of the company? Under what circumstances would corporation choose to cease to operate? More personally, the following: what would you be willing to offer your life for? I submit that corporations need to develop, gauge and reward this meaning as the effectiveness counter-balance system.

The point is that if a hierarchy by peer ranking is the highest value and if people are rewarded and punished by this in the absence of another approach that rewards and punishes [in this case] cooperative synergy toward a strategic intent, you will have a lopsided management model quickly bedevilled by the law of diminishing returns.

In summary: Welsharian management is to encourage individual performance. This is a simple, clear and rational approach. Fostering true strategic intent that precipitates identification with real values people truly believe in and which empower self-denial is complex and intuitive. Break-through management is aligning these two systems and not seeing them as a paradox.

As leaders (Management) of the team we by the nature of the job need to evaluate our employees every day. This is where the performance evaluation falls down. If you go through your day to day work and do not think about the performance of your team and then spend one week out of the year with the formal process of evaluations then this is part of the barrier.

Performance evaluations are an easy way out for management. We have a written document that proves why one gets a big raise or bonus and maybe why another gets fired. I have found that I need the 5's as much as the 1's but in my line of work our missions go from manual labor to engineering a fix to a complex machine. Having said that it is my view that we are in the position to bring the 1's up and keep the 5's motivated to accomplish the mission.

Performance evaluations are only a barrier when we condense a years worth of work on one or two pages during the formal process. Companies need to think of the process as a tool to gauge the performance of the company not one employee at a time. As a manager I look at my employee mix, ask myself "is any of my employees holding the team back" and only then use the evaluation process as the tool it is.

So I contend that the barrier is gone if the Company's use of the performance evaluation is only one piece of the pie and not an easy way to determine bonuses or a reason to fire.

Susan Scott, in Fierce Leadership (Broadway Business, 2009), describes in het Chapter "From 360 degree anonymous feedback to "365"days face-to-face feedback", the better alternative. "The goal of the fierce practice is to have open, honest, face-to-face conversations, 365 days a year, with the people central to your success and happiness, whether you reportto them, they report to you, or no-body reports to anybody. Give it and receive it. Set aside rank, title...."p. 38)
In my experience the annual exercise is a summary, a reflection of the year's discussions, with no surprises possible. Managers who tell me that they have to time to give and receive feedback on a day to day basis, have to reconsider their priorities.

Personally I quite like the feedFORWARD approach of Marshall Goldsmith. Here you can find some info and related links: http://www.coachingourselves.com/en/blogs/new-coaching-program-topic-fee...