In this market there’s no room for under-performers. So, ask yourself… Who are you carrying?

Alex KaarFeatured In this market there’s no room for under-performers. So, ask yourself… Who are you carrying?

In this market there’s no room for under-performers. So, ask yourself… Who are you carrying?

Former General Electric Co. CEO Jack Welch is a passionate advocate of the “bottom 10 percent rule”.  In his 2005 book “Winning”, he advocates that managers should assess their employees every year, and divide them into three categories: the top 20 percent, the middle 70 percent, and the bottom 10 percent.


He advocates that the top 20 should be sprinkled with financial rewards, the middle 70 should be given thoughtful coaching, training, and goal-setting,  giving them an opportunity to move up into the top 20 percent.


As for the bottom 10 percent, “there is no sugar-coating this,” Mr. Welch says. “They have to go.”


It’s a controversial style of management and it’s certainly been met with its critics, but it’s a concept that I frequently road test with senior executives.


A question I often ask senior leaders is, “If you could exit the bottom 10% of your team… would you?” 


“Well… Of Course!” they respond 


“So… Why don’t you?”  


This question seems to be a lot harder to answer.    


“It’s not the right time. Bureaucratically, it’s too hard to let anyone go.  “I’m worried about the optics.”  “I can’t go through a recruitment process now... I’m just too busy.”  


These are just some of the myriad of excuses I’ve heard over the years.  Most leaders are generally optimistic and they genuinely try to see the best in people However, this can result in making the mistake of holding on to someone for too long, someone they knew just wasn’t right and as a result, it costs the business, both financially and culturally In fact, many of the people I speak to have been so indoctrinated with the “team” mentality that’s come to the fore recently that it’s almost become a taboo topic to discuss individual performance.  Some of these leaders are so hampered by company cultures that refuse to acknowledge individual accountability, that they find themselves caught up in a system that will hamper every effort to remove under-performers.


I’ve had countless conversations over the past few months with senior leaders from a range of organisations across every industry. The resounding feedback is that they are all reviewing the capability of their personnel and they are acutely aware of the need to reshape their teams in order to ready themselves for the new economy.  In a stable market the under-performers are tolerated and can be camouflaged, making them hard to find. However, in a challenging market, A grade talent stands out.  Conversely, so too, does the B grade talent.  Everyone is exposed.


What’s it costing you? 


How do you put a dollar figure on what a bad hire costs the business? The reality is… you can’t.  There’s actually a bigger cost to the business and to you personally. By allowing the slowly marching army of “average” to erode your organisation, you are sacrificing your culture of “excellence” and trading it for a culture of mediocrity.  That cost far outweighs the immediate financial impact, which is measured not in quarters, or years. The legacy of average can last decades or generations.  


Over time, your inability to keep standards high means that you are actively accepting that “just okay” is “okay”. Now that standard becomes your new benchmark. Your new normal.  That new benchmark produces lower returns, creates more cultural problems and, worse still, it means that you’ll never get back to where you were.   


Demand more of yourself and set a higher benchmark – Just “okay” is not okay!


The great people you once had beating down your door won’t want to join your team anymore, and with fewer top talent around to support you, your job will become infinitely harder.  You will end up picking up the slack and rather than empowering your team, you’ll inadvertently create a culture of micromanagement and disempowerment. The team are no longer the problem.  YOU are the problem. I’m sorry to say it, but the only way for the business to claw back is to get rid of you.  If you think I’m being dramatic, keep in mind that I’ve seen countless executives over the past 25 years tread this well-worn path and I’ve had the feedback from the one, or two up managers of these people once they’ve been earmarked for an exit because they couldn’t get the performance of their team up to standard.


Courage and Integrity  


The issues most leaders struggle with when letting their under-performers go is either a sense of loyalty to “do the right thing” by people they have developed a bond with.  The other side of the coin is there are plenty of “hatchet” leaders whose only weapon is to slash and burn.  To be a truly great leader, you need to have both weapons in your arsenal and the willingness to act both empathetically and dispassionately To the untrained eye, those two words might seem diametrically opposed, however this is not the case. 


Many leaders over index on empathy and lose all sight of the gruesome task that’s in front of them.  In their quest to be “liked”, they lose all critical thinking and end up with a ship full of under-performers.  Please keep in mind, you have a responsibility not only to your people, but to the business and its shareholders.  


“Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while” – Jack Welsh. 


It takes a great deal of courage to act dispassionately, as you are not going to be remembered as a hero, but rather the villain who did the thankless dirty work.  It’s not a job for the fainthearted.  As the Iron Lady, Margaret Thatcher, once said “The medicine is harsh, but the patient requires it”.  If you are going to be a great leader, you need to be able to make the hard decisions.


By the same token, you need to act with integrity and acknowledge that you are dealing with people.  Your sweeping change and headcount reduction affect individuals and families and there’s a way to let people go from a business that ensures that you have acted in the best interests of the organisation and the individual.   


Offering outplacement is one way to provide support, but for me, the main point to note is that you must always treat people with respect as they leave the business.  Thank them for their service.  Recognise their contribution and give them positive, constructive feedback so that they can learn from the experience and better themselves for the future.   


What are you afraid of? 


It genuinely concerns me that many people I see are afraid of hiring people who are better than them.  This is possibly the biggest failure of contemporary leadership. Your evolution as a leader will be influenced by a variety of people and often mentoring can come from the most unexpected places.  Many people think that it’s the person above them that can and should provide their ongoing growth mentorship.  I assure you, this is not and should not be the case.  The better the team you have underneath you, the more you’ll have to strive to be a better leader.  You’ll have no choice, as your team of superstars will hold you to account. They’ll need you to be your best self.  Put yourself on the hook.  


When it comes to making change, the biggest risk you can take is hiding in the comfort of the safety net.  


Ask yourself – If I choose to make this change, to draw a line in the sand on performance and not accept mediocre as the norm, what’s the best and the absolute worst that can happen?  Some of your team will leave.  You may upset some people.  Although unlikely, you may even get fired for it.  Then what?  You join another company, but this time you go in sharper, hungrier and more unwilling to tolerate “average” and thus, the battle is easier. This time, you’ll have no legacy issues” holding you back, no friendships to cloud your judgement and as such, you’ll make rational decisions quickly.  


By the same token, the best outcome is that after the initial reset, you’ll build a high performing team, you’ll win the trust of the executive and be known as someone who can instigate a turnaround as someone who can get things done. Either way, you’ll look back at your old self and wonder why you ever spent so much time floundering, making excuses and accepting average.    


So now what?  


My message is simple – Don’t accept average.  Set your standards high and do something now. If you don’t, the next person leaving the business might be you.  Take a look at the skills, capabilities and attitudes and potential in your team and ask yourself the hard questions: 


Given that we are going through the biggest economic disruption since the great depression, do I have the right people to tackle the challenges of the new economy?  Do I have the people who can identify and take action on the new opportunities that will arise? What competencies, attitudes and values do I need to futureproof my business?  Do I have the right combination of people to achieve the objectives? 


By making the tough decisions now and by strengthening your team, your business will be in a prime position to take advantage of every opportunity, both during and after the recession. The decisions you make, or don’t make during this period will be critical to your career.

Chris Karagounis

Chris is the Managing Partner of Alex Kaar Australia and was a member of the founding private equity group that established the firm in 2004. Chris has been an active executive search consultant for over 20 years

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