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Compared to What?

By Kathy Barton, August 30, 2007

I spent the first half of the '90s working at GE. This was in Jack Welch's heyday: best practices, work-out, and management course from Harvard professors at the training center at Croton-on-Hudson (affectionately referred to as Camp GE.) It was a great experience, but there were a few things about GE's personnel policies that didn't really make sense. One of these was what we called the 10-80-10 policy.

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The concept behind this was a good one--that managers (and companies) should be constantly upgrading their talent. Can't really argue with that, can we? As with most things, the devil was in the details. 10-80-10 said that each manager should group their employees into three buckets: the top 10%, the middle 80%, and the bottom 10%. The top 10% was rewarded with stock options and training opportunities, the middle 80% was reviewed based on that year's performance, and the bottom 10% was supposed to be let go. And you were supposed to do this EVERY YEAR.

Well, as you can see, unless you are deliberately hiring non-performers just so you can let them go as part of your 10%, this is a very difficult thing to do. The rating scale that GE used was a 1-5 scale, with 1 being the highest and 5 the lowest. Most managers didn't have any employees that were rated below a 3. If we did, we got rid of them in the first six months--we didn't wait for the annual review cycle. The GE culture was just too demanding for a manger to keep under-performers around. The concept was that you could look at all of your employees, compare them to each other, pick the lowest performers from all your 3's, and let those people go.

But it doesn't work like that. Most of these employees aren't doing exactly the same job. More than that, they have different strengths and weaknesses that make it almost impossible to do any kind of a direct comparison. Yes, you have your really strong performers that rise above the rest, but the others are very tough to compare to each other. There were two flawed assumptions underlying this concept. The first is that you can compare employees to each other to evaluate performance. The second is that there is something wrong with a level 3, or satisfactory, performance.

Comparing employees to each other to evaluate performance is a very dicey area. The only situation where I can think of where this works is when you are looking at your star performers, and defining what it is they do that is different from the rest of the staff. Then you can take this information and leverage it when hiring new employees or working to improve the performance of other employees--a best practices approach. But even this doesn't always work. We've all had top performers whose working styles were very different, but still achieved top results. One person's style and process often is very specific to their personality, and can't be transplanted to anyone else.

This is a situation where having a clearly defined Performance Profile for each position is so important. The best way to measure an employee's performance is against clearly defined performance goals written for their specific position. In a truly high performing company with a commitment to hiring and retaining top talent, this Performance Profile is a living document. A manager should sit down with each employee and review the document every quarter. Did you meet your quarterly goals, or make the appropriate amount of progress against an annual goal? Why not? Do we need to make any changes to next quarter's goals? Do I want to add a goal based on what I've seen from your performance so far?

As managers, it's easy to believe that our employees have to achieve their goals in the same way that we do. The hardest thing to do is to let employees do things in their own way, as long as it gets them to the goal and doesn't have any negative consequences. I had a talented product manager who was very effective at getting things done in a totally non-confrontational way. He managed to make people think that his ideas were their ideas. It worked, but the downside was that people didn't see how effective he was, and it was hurting his chances of promotion. I added a goal that said I wanted at least three people to tell me what a great job he did on his next project. He still didn't run the project the way I would, but the project met all its goals, and he took a more proactive posture that got him more recognition. Consistently using the Performance Profile that was used to hire an employee can help both the manager and the employee track growth and success in a way that isn't dependent on anyone else's performance.

The other mistaken assumption is that level 3 performance (whether you call it "satisfactory" or "meets expectations") is somehow insufficient or inadequate. Why define it as satisfactory if it isn't? I don't know about you, but my expectations for my staff were always pretty darn high. I looked for people who had the capability to do the work, the motivation to do the work, the ability to be a good team player, and the willingness to go the extra mile. I just couldn't understand a program that required me to take one of those people and let them go. Don't call it satisfactory if it isn't! How can you require me to get rid of an employee who is meeting my expectations and doing a good job?

The flip side of this coin is that, as managers, we can't require recruiters to get us "star" candidates unless we really need them, and can give those people the resources and promotion opportunities they will require. Make sure you have a clear performance profile that defines the level of performance that would meet your expectations for a person in that role. If your recruiter finds you candidates who can meet that level of performance, it's counter-productive to require them to find "stars." If the candidates don't meet your expectations, you defined the Performance Profile wrong. The best way for a company to hire and retain top talent is to start with people that meet your high expectations, and then make sure you are meeting theirs.