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Engagement Practice 21: Terminate Nonperformers
When Best Efforts to Coach or Reassign Don™t Pay Off
It may seem contradictory to recommend a practice devoted to the termi-
nation of poor performance after having recommended another practice
encouraging the commitment to correcting poor performance. However,
I do believe these two practices must coexist in employers of choice. De-
spite your best efforts to coach non-performers or change the nature of
their job assignments, there will be times when it is simply best to let the
employee go. The problem is that, all too often, other valued employees
know when that time has come long before the manager does, and the
manager™s failure to act can adversely impact their commitment.
As one business columnist described the situation, ˜˜We™re in the mid-
dle of a vast wave of non¬ring. . . . The damage to millions of lives, and
the economy, is beyond calculating. . . . Keeping poor performers means



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that development opportunities for promising employees get blocked, so
those subordinates don™t get developed, productivity and morale fall, good
performers leave the company, the company attracts fewer A players, and
the whole miserable cycle keeps turning.™™24
This is a theme that appears in all the employee survey results I have
seen”good performers consistently complain that underperforming em-
ployees are tolerated, even promoted and rewarded with raises, while they
themselves are overworked or ignored. When McKinsey asked thousands
of employees how they would feel if their employees got rid of underper-
formers, 59 percent strongly agreed with the option ˜˜delighted™™”yet only
7 percent believed their companies were doing it.25
Jack Welch expressed his feelings on the matter quite clearly in a letter
to GE™s shareholders, customers, and employees before leaving his post as
CEO, saying ˜˜Not removing the bottom 10 percent . . . is not only a
management failure, but false kindness as well.™™26 This stance opens a
highly controversial door”whether to eliminate the bottom 10 percent
each year. Some believe this helps to continually upgrade the organization™s
talent level, while many others believe the ˜˜rank and yank™™ approach
eventually leads to the termination of competent employees who just hap-
pen to fall into the bottom 10 percent of highly performing teams, and can
also result in litigation. Conversely, a mediocre employee in a struggling
unit may come out looking great. To mitigate this concern, some compa-
nies reduce the percentage of employees to be weeded out in successive
years, as in 10 percent the ¬rst year, 5 percent the second and third years.
Many proponents of forced ranking systems believe they force manag-
ers to be honest with their employees about how they are doing. Others
argue that forced rankings can become a crutch for poor management,
making the case that good managers should have the ability to make dif¬-
cult decisions without having a system force it on them.
No matter where one stands on this issue, there is considerably less
doubt about the need to step up and make tough decisions to cut nonper-
forming employees when all else has failed. Most managers would probably
agree with Welch™s point about ˜˜false kindness.™™ As Debra Dunn, senior
executive at Hewlett-Packard, put it, ˜˜There is no greater disrespect you
can do to a person than to let them hang out in a job where they are not
respected by their peers, not viewed as successful, and probably losing their
self-esteem. To do that under the guise of respect for people is, to me,
ridiculous.™™27



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Engagement Practice 22: Hold Managers Accountable
for Coaching and Giving Feedback
If 60 percent of a manager™s time is spent ¬xing people problems, you
might think more companies would make special efforts to hold managers
accountable for coaching and giving feedback to employees.
Some companies, such as The Security Bene¬t Group of Companies in
Topeka, Kansas, have introduced ˜˜upward evaluation™™ systems that allow
employees to give feedback on their managers™ people management and
coaching skills. When surveys are completed, results are reported both to
the manager and the manager™s manager for use in performance and devel-
opment discussions. Security Bene¬t has noticed that evaluation results
have become more positive since the practice was begun in 1995.
Many other companies have begun incorporating coaching and feed-
back competencies into the lists of key competencies they require of all
leaders. For example, instead of listing ˜˜people management™™ as a single
competency for managers, it is more meaningful to select, train and evalu-
ate managers against competencies that are more speci¬cally de¬ned. This
means that people management skills might be further broken down into
more speci¬c competencies, such as human resource planning, employee
selection, performance coaching/feedback, training/development, and
employee recognition/motivation”with clear de¬nitions provided for
each of these.
Management books such as Daniel Goleman™s Emotional Intelligence at
Work and Primal Leadership have also made many organizations more aware
of the importance of emotional intelligence factors in selecting and pro-
moting managers. Goleman describes the Coaching style of leadership as one
of the most highly positive of six predominant leadership styles”the others
being Visionary (most strongly positive), Af¬liative (positive), Democratic
(positive), Pacesetting (often negative), and Commanding (usually negative
because it is so often misused). Yet, he concludes, ˜˜Despite the commonly
held belief that every leader needs to be a good coach, leaders tend to
exhibit this style least often.™™28
Regardless of how carefully we spell out competencies and study lead-
ership styles, the only way to ensure that any new practices are working is
to hold managers accountable and create new rewards and consequences.
When corporate of¬cers were asked if line managers should be accountable
for the strength of the talent pool they are building, 93 percent said they
should be, yet only 3 percent said that they actually held line managers
accountable for this outcome.29



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One company that is holding managers accountable for people out-
comes is Applebee™s International, which has installed balanced scorecard
measures for its restaurant managers based on results in three areas”
¬nancial, people, and customer. In 2001, the company started holding its
area managers accountable for people results in four key areas with signi¬-
cant impact to the bottom-line”hourly staf¬ng levels, percentage of em-
ployees retained among the top 80 percent of all staff, hourly new-hire
retention rates, and progress on succession management. Performance on
these four measures account for 30 percent of the formula used to deter-
mine pay raises. Applebee™s also sponsored an annual contest among area
managers called ˜˜Turn Yourself Over to the Tropics,™™ which awarded top
performers on low management turnover measures with vacations in Can-
cun and cruises to the Bahamas.
How have these new practices worked? The annual turnover rate
among hourly employees had dropped from 146 percent in 2000 to 92
percent in 2003, and turnover of restaurant general managers had fallen
from 20 percent to 8 percent over the same period. The drops in turnover
have to be attributed to more than a recessionary economy, as Applebee™s
turnover rates have dropped further and faster than most of their competi-
tors in the casual dining restaurant category. Based on avoided hard replace-
ment costs for restaurant managers alone, the company conservatively
estimated a one-year savings of $1.6 million. Having achieved a cascading
positive impact by measuring area managers, the company hopes to realize
even greater dividends as it rolls out the same four people measures to
managers of individual restaurants.
Another effective way to create accountability among managers for
people results is to promote and select candidates for managerial and execu-
tive positions based on higher standards of management behavior. One of
the best-known examples of this came to the attention of the public in
early 2001, when Jack Welch, in his annual letter to stockholder, customers,
and employees, announced GE™s new policy and practice regarding the
way managers treat employees.30 The memo described four types of manag-
ers that existed at GE and at all companies (see Figure 6-1): The Type 1
manager treats employees with respect and makes the numbers (keep), the
Type 2 manager treats people with respect and doesn™t make the numbers
(keep and coach), and the Type 3 manager doesn™t treat people with respect
and doesn™t make the numbers (terminate). The problematic type of man-
ager had always been the Type 4 manager, the kind of manager who always
made the numbers but did not treat people with respect. In the letter, Welch
admitted that in the past GE had been guilty of keeping far too many of

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Figure 6-1.
Four types of managers.
Makes Numbers Doesn™t Make Numbers




Treats People
Type 1 Type 2
with Respect




Doesn™t Treat
Type 4 Type 3
People with
Respect




the Type 4 managers. In the future, he promised, these types of managers
would no longer be tolerated at GE”they would be dismissed.
As new jobs are created faster than the supply of workers can keep
pace, more and more companies will create ˜˜bad manager identi¬cation™™
initiatives. Finding themselves once again in a full-blown ˜˜war for talent™™
like they experienced in the late 1990s, many aspiring employers-of-choice
will realize, as GE has, that they can no longer afford the luxury of keeping
any manager who drives talent out the door.



What the Employee Can Do to Get More Feedback
and Coaching
The fact that we have covered so much territory encompassing all the
things managers and organizations can do to improve performance through
coaching and feedback by no means suggests that employees should depend
on managers to take the initiative. Here are ways that employees should be
expected to seek out and get the coaching and feedback they need when
they need it:

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• Whenever you believe you are not receiving the feedback and
coaching you need, ask for it.
• If you ¬nd you are reluctant to seek feedback, start by asking those
with whom you feel most comfortable.
• Develop the habit of asking for feedback from peers, customers, di-
rect reports, task force coworkers, administrative assistants, and any-
one with whom you might interact, not just the boss.
• If you receive feedback that is too general, or dif¬cult to understand,
ask for speci¬c examples.
• If you have never been invited to write your own performance ob-
jectives or begin a performance evaluation by giving your own self-
assessment, ask to do so.
• If you are not comfortable with your performance objectives or ap-
praisal results, speak up. Try to reach a satisfactory mutual under-
standing with your supervisor.
• If you feel that changes in circumstances have necessitated that
changes be made in your performance objectives, request a meeting
with your supervisor to rewrite the objectives.
• If your company makes 360-degree feedback assessments available,
consider asking if you can participate in the process.
• Ask whether your company provides off-the-shelf personality and
work-style inventories, employee development planning guides, or
competency assessments you can take.
• If you feel you are spending more time trying to improve weaknesses
than building on your strengths, change your developmental objec-
tives, your supervisor, or your job.
• If your company retains external coaches to assist current employees,
ask if they would be willing to provide such coaching at your level.
• If your organization does not retain outside coaches at your position
level, consider retaining an outside coach of your own.
• If you work for a supervisor who is not interested in coaching or
giving the feedback you need, consider seeking a new position
within the company where you can work for a manager who is, or
leave the company.

Employer-of-Choice Engagement Practices Review
and Checklist
Review the engagement practices presented in this chapter and check the
ones you believe your organization needs to implement or improve.

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To Provide Coaching and Feedback:
17. Provide intensive feedback and coaching to new hires.
18. Create a culture of continuous feedback and coaching.
19. Train managers in performance coaching.
20. Make performance management process less controlling and more
of a partnership.
21. Terminate non-performers when best efforts to coach or reassign
don™t pay off.
22. Hold managers accountable for coaching and giving feedback.


Notes
1. Ron Zemke, ˜˜The Corporate Coach,™™ Training Magazine, December
1996.
2. Ibid.
3. Ibid.
4. McKinsey Work Force 2000, Senior Executive and Midlevel Surveys,
2000.
5. Morgan W. McCall, Jr., High Flyers: Developing the Next Generation of
Leaders, (Boston: Harvard Business School Press, 1998).
6. Ferdinand Fournies, Coaching for Improved Work Performance (New York:
McGraw-Hill, 2000).
7. ˜˜Career Developments,™™ Newsletter of Career Development Services,
Inc., September 18, 2003.
8. Ed Michaels, Helen Hand¬eld-Jones, and Beth Axelrod, The War for
Talent (Boston: Harvard Business School Press, 2001).

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