Entrepreneurial Leadership and Management . . . and Other Stuff

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Sep
25

Hiring and Firing the George Steinbrenner Way

For all sports-o-phobics out there, this is really an article about management . . . it’s likely to be a controversial one at that.

Even as a die-hard Red Sox fan, I can’t deny the fact that the New York Yankees are likely the greatest sports franchise of all time, at least as measured by success on the field.  George Steinbrenner (the owner of the team for those of you who live in a cave), doesn’t get all the credit for that, of course, but he can take much of the credit for their tremendous success over the last 30+ years.  A period that includes 10 trips to the World Series with 6 World Series Championships.

A key part of what Steinbrenner does to build championship-winning teams is to hire the best people, with the cost of those people being, at the most, a secondary factor.  The results of such a strategy can be clearly seen in the 2007 Yankees.  This year, Steinbrenner recruited Roger Clemens back to the Yankees with a $28M contract, making him the highest paid player in baseball . . . ever.  Clemens got that kind of money even though he was going to miss the first two months of the season and, as a pitcher, was only going to play every 5th game.  Since coming on board, Clemens is only 6-6 with an ERA of 4.18 (read: not very good).  So, you might ask, why does that make Steinbrenner smart?  Look at the team’s success before and after Clemens started: before Clemens, 48-44 (.522) and after, 42-22 (.656).  The money wasn’t only paid for his pitching arm, but also for his leadership, experience and the message about the importance of winning signing him sent to the rest of the team.

Clemens isn’t the only example, of course, the second and third highest paid players in baseball are also on Steinbrenner’s payroll.  Alex Rodriguez ($26M/year) is having one of the all time great years for any baseball player, ever.  Derek Jeter ($23M), is another one of baseball’s great players and, like Clemens and Rodriguez, is an easy pick for the future Hall of Fame.  Jeter consistently plays outstanding ball and is a fabulous team leader.

As you’d expect, however, it’s not just about spending all the money in the world to bring on the best individual performers.  Recruiting and retaining the best management is probably even more critical.  And, while Steinbrenner has had very public fallouts with his management team, he has always had some of the premier managers – both on the field and in the back office – of any team in baseball.  As you would expect, he pays them a lot, too.

I’m not suggesting that it’s as simple as just offering more money than anyone else to pick up the cream of the crop.  In fact, the Yankees carefully foster the culture they have of being the best; the historical significance of playing in pinstripes (the Yankee’s uniforms); and the psychological advantage of playing for a perennial winner.  These things and more attract players and management to the team.  But, if you look at how free agents move around the sport, you’ll see that the Yankee’s tend to retain their best players and this is greatly because of the money.

Steinbrenner isn’t shy about broadcasting that he pays the best and expects the best.  Thus, he has no qualms about firing anyone who isn’t an elite performer.  In his first 23 seasons, Steinbrenner fired 20 managers (including one, Billy Martin, five times).  There’s a well-known Seinfeld episode in which the character George Costanza, who works for the Yankees says, referring to Steinbrenner:

He fires people like it’s a bodily function.”

Personally, I can’t condone Steinbrenner’s antics nor his public airing of his displeasure with his team or its players, but he has a long track record with proof that his hiring and firing methodology works within the culture of his team.  Foster a winning environment and legacy that naturally attracts the best; pay whatever it takes to make them a member of the team; and cut poor performers as quickly as possible.  It’s hard to argue with the results.

Yeah, OK, that sounds pretty ruthless (insert your favorite Babe Ruth play on words here), but after years of watching good business teams turning lead into gold and poor teams failing with great products or markets, I can’t help but feel very strongly about the value of having a good team, especially a good management team.  And, when you look at things that way, what’s the real cost of paying (the total comp package – base + variable + equity) what it takes to get the best people.  I believe that, in most instances, the incremental compensation cost is virtually nothing compared with the opportunity cost of not doing it.  A great top-level manager is highly-leveraged and can make an organization much better.  If he/she increases the productivity of each of the members of a team by just 10%, does that not make the extra cost worthwhile?

As with the Yankees, to make a strategy of hiring the best regardless of cost work, you need to assume that you’re going to make mistakes.  When this happens, you have to be willing to fire the employee, especially if he/she is a manager, as soon as possible.  That same leverage that helps a great manager create great teams can also work negatively, running good teams into the ground before you realize it.  Finally, it can never be all and only about the money.  You have to build a culture that people are interested in working in and in which they are motivated to do there best.

Some of you are saying that paying more is unnecessary because you run a terrific company or group and people want to work with you.  Others may be saying that there’s no point in paying for the best because at some point you reach diminishing returns.  You may be right.  In fact, if you’re running a raw startup, the intangible recruiting factors often overcome the tangible ones.  Once your organization begins to mature, though, you’ll start to value wisdom and experience over pure determination and hard work.  You’ll always want to be bringing people with varying levels of experience and knowledge on board, especially at the individual contributor level, but keep in mind, you generally get what you pay for.  This fact is even more important at the managerial level.

Paying more is obviously no guarantee of getting more.  You still need to do all the due diligence you can in order to make sure that a candidate for a position is the right one – on a cost-independent basis.  If you find that the best candidate is also the most expensive, don’t be shy about selected him/her.  The best people are often known to be the best and are heavily recruited.  It’s all about supply and demand, good people will often cost more.  They also produce more.  Isn’t that worth the incremental cost?  George Steinbrenner and the winningest sports franchise in history think so.

 September 25th, 2007  
 Will  
 Management  
 ,   
 14 Comments
Sep
18

Prune and Upgrade as You Go

An investor and board member of one of my early companies used to say:

any day, any time, you can fire a canon through the company’s building and not miss the employees taken out in the blast.” 

I wish I could definitively say that he phrased it that way just to emphasize the point that a company can almost always trim or upgrade its workforce, but knowing the guy, I’m not entirely sure he wasn’t recommending that his suggestion be followed exactly.

I never did follow that board member’s precise instructions and, perhaps because his point was so blunt, I never really got a handle on the meaning behind his controversial statement.  The fact is, though, that his point is an important one that very few managers understand until it’s too late.

It’s easy for any manager, in the throes of intense deadlines, seemingly insurmountable stacks of work, problems everywhere he/she looks and a boss that doesn’t let up to do anything other than grab for as many resources as possible to help them get things done.  In the frenzy, hiring standards are often lowered and the management and training of junior people is sometimes ignored.  Inevitably, and yes, it happens to all managers no matter what they think, organizations get bloated – sometimes they become larger than they need to be and at other times they get staffed with the wrong people, that is, people that don’t have the right skill-set, are not organizationally aligned or are too junior.

Because this situation develops slowly, over time, it’s generally not recognized until it’s too late.  And, since the workload never seems to subside, very few managers have the fortitude to step back and fix the problem once it’s recognized by cutting or changing staff.  In fact, the knee-jerk reaction is to continue to add more resources.  It’s like the boiling frog story – as it’s told, if a frog is placed in boiling water, it’ll jump right out.  But, if it’s placed in cold water that is slowly heated, the frog will remain in the water until it meets its demise in the bubbling cauldron.  Gradually, the organization gets bloated and sometimes significantly larger than it needs to be.

So, how does a manager avoid the problem?  By recognizing that it’s almost inevitable from the beginning and by consciously remaining lean and focused at all times.  An organization should have as few people in it as possible – just enough to get the job done right.  In order for that to happen, all the people need to be the right people – those that are as qualified for their roles as possible.

Even groups and companies that have achieved such organization nirvana need to be constantly evaluated.  Goals and strategies change and it’s unlikely that everyone who was perfect for the roles required earlier will still all be the best candidates for what is needed moving forward.  I’m not suggesting heartless slashing and burning here, just a thoughtful and constant evaluation of what is needed to get the job done most efficiently.  It may seem painful to make cuts and changes along the way, but it’ll be way less painful than making emergency, large-scale cuts later when expenses get out of control.

Here are some guidelines that might help to implement a process of dynamic pruning and upgrading of your organization.

When:

  • Now.  It’s the best time to start.  Immediate action may be required if you’re already in some financial trouble, but if you’re ahead of the game, a thoughtful analysis now will set you up for making changes at the end of your current project, fiscal period, employee review or other time you get to catch your breath (if even for a second) in your business.
  • Then, re-evaluate at each chance you get.  Employee reviews are always a good time because they force you to think through the performance of an individual – are they the one you want in their role moving forward?
  • When you’re doing planning for the next fiscal period, especially when that includes staffing plans.  Is your organization as productive as it should be?  Instead of thinking about size, think about productivity.  How much more will you get by adding another employee at the same productivity level?

Who:

  • First evaluate the managers that work for you.  They’re the most highly  leveraged people in the organization and must be the best fit for their future roles.  A non-ideal manager will hurt productivity more than non-ideal individual contributor.
  • How is the group performing?  Is it cohesive?  Are there people who disrupt the group internally?  Disruptive individuals hurt the productivity and effectiveness of others and, therefore, put a drag on the whole group.
  • The person with the right skills might not be the person who knows the most or even works the hardest – it might be the person that learns the best or adapts the easiest.
  • The kind of people you hire and retain sends a strong signal to the entire organization about what you value in your employees.  What message are you trying to send?  What do you value?

How:

  • Never reduce your standards when hiring in the first place.  It’s just not worth it.  The cost of waiting for the right employee is almost always less than the opportunity costs associated with hiring someone and investing in them for six months before discovering it’s not going to work.  You’ll make hiring mistakes for sure, but fight the urge to ignore the stuff you already know is important.
  • Look at the organization as a whole as well as the individuals in it.  Is the organization producing as much as it should?  Is it producing the quality of product or service it should?  Sometimes the conclusion is self-explanatory – “why aren’t we moving further/faster with all the people we have?”  Sometimes the organization is doing too much.  Sometimes, too little.
  • It’s almost never a good idea to fire someone out of the blue, without trying to work with them on their issues or train them to be better at what they need to do (although there are certainly times when immediate firing is necessary).  If you hired right, you can usually bring people around.  Your desire to shape the people in the organization will also been seen by other employees who will get the message about how you are dedicated to those that are there.
  • If, after working with an employee – including training them on any new job responsibilities, your gut tells you that you can upgrade – do it.

As I mentioned earlier, this type of problem happens all the time and, while it’s difficult to avoid entirely, it’s possible to stay on top of it and make sure that bigger problems don’t occur later.  Like most self-help programs, the first step is recognizing that you have a problem or, at least, a potential problem.  You then have a shot at managing it in a thoughtful, proactive manner.

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 September 18th, 2007  
 Will  
 Management  
   
 1 Comment
Jul
18

How to Manage a Layoff

All companies, yup that includes the successful ones, eventually have some form of layoff.  Before you go ballistic on me, let’s first define a layoff.  According to Wikipedia, a layoff is:

the termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary. Originally the term “layoff” referred specifically to a temporary interruption in work, as when factory work cyclically falls off. However, the term has long been applied also to the permanent elimination of positions as a cost-cutting measure (or for other reasons).”

So, a number of employees (one or more) that are terminated for larger business decisions as opposed to for poor individual performance is a layoff.  Even successful companies at times make decisions to get out of a business or change a focus that results in the laying off of some employees.  Similarly, an acquisition of another company with some degree of overlap of people can necessitate a layoff of redundant people after the merger.

More likely, of course, are layoffs that are the result of a downturn in business.  Here again, terminations are not related to individual performance (other than, perhaps, the decision to lay off one person instead of another), but are a result of a business restructuring required to help the company deal with its financial difficulties or other current crappy situation.

A layoff has nothing to do with firing employees, though.  I frequently talk to CEOs or other high-level managers who say that they are laying off people when they are really firing them.  In my opinion, these people are less confused about the terms than they are in hiding behind the softer term, layoff.  They think it sounds better to the people being fired as well as those who remain.  When somebody isn’t cutting it and you’ve done your best to make it work, you’re firing them.  Period.  Call it what it is.  Everyone is happier with clean, honest straightforward messages in the end.  ’nuff said.

If layoffs are inevitable, then it’s critical that strong leaders and managers know how to do them.  As with firings, in the broad business scope, it’s critical that you optimize the management of any layoff so that your business or organization is set up to be successful moving forward.  That means thinking about the people and the organizational situation left after the layoff as much as, if not more, than the people being laid off.

With that in mind, here are my 9 guidelines on how to manage a layoff, in no particular order:

  • Do it quickly – nothing will drain the life out of an organization faster than mass fear of job loss.  Rumors are uncontrollable and people pick up on small signals incredibly well.  While it’s very important to make sure you spend the time to get a good action plan in place, don’t let the time between a decision to do a layoff and the execution of it extend longer than it absolutely has to.  As a corollary to this one, avoid sending up red flags before you’re ready.  The rumor mill is powerful, there’s no need to help it along.
  • Do it once – this is a mistake I see made all the time.  A layoff is done in stages because management: is afraid that they’re cutting too deep; know they’ll need some folks to complete their current tasks before they’re laid off; miscalculate the savings they’ll get from the layoff; or, is just wimpy.  Not completing a layoff in one pass will kill the productivity of those who remain.  They’ll wonder if they’ll be in some subsequent round, even if none is planned.  They won’t believe it’s really over until loads of time has passed without incident or they’ve left the company.
  • Cut deep – you may think that you’re a spreadsheet wizard who can run detailed sensitivity analyses indicating the precise range of the financial impact of your layoff.  Trust me, you can’t.  People who you thought would stay will quit; you’ll have legal fees that you didn’t expect; there will be a severance issue that you didn’t even consider; or, one of 10,000 other unpredictable things will happen.  Leave yourself some room, cut more people than you think you need to.  You’ll be happy that you did when it’s all said and done.
  • Plan ahead – Decide how you’re going to handle the termination details – have any severance, benefits, insurance, outplacement service offerings or reference policy well documented ahead of time (can you afford any of these?).  Plan for and know exactly how long each employee should stay around before they are laid off (generally speaking, people should be walked out the door the day the layoff is announced).  Have the complete package (written) ready to hand to the employee when they are told they are being laid off.  Have a script ready if more than one manager is laying people off.  Consistency is important.
  • Cover your ass legally – while tight cash may be the issue that led to your layoff, getting some legal advice if the layoff is in any way extensive might be a good idea.  As you likely already know, there are no bounds to the legal problems that employee matters can bring about.  Run your plans by your lawyer at least for a sanity check.  It’s money well spent.
  • Do it in person – as absurd as this sounds, you’d be surprised at how often people are laid off by email or on the phone.  The manager of each person being laid off should take the employee aside, explain what is happening and what benefits are part of the layoff.  If a manager is laying off multiple employees, they need to balance the need to spend time with each one, with the fact that everyone else in the group is waiting to see if they’re next.  So, be kind, but be clear and to the point.  Don’t beat around the bush.  You don’t have time.
  • Communicate – Make it clear to everyone (those being laid off and those remaining) why it happened and what has been done or is being done to make sure it doesn’t happen again.  Emphasize that the layoff as just witnessed is OVER and that no one else will be laid off because of the current situation (new situations may, of course, come up).  Stand up and take responsibility if poor decision-making or a specific strategic choice led to the current situation.  Be clear – nothing complex.  Explain why those being laid off were selected for the layoff instead of those remaining.  Be respectful of those departing and thank them for their efforts, they are not being laid off as a result of anything they did, after all.  Be ready to meet with each person you manage one-on-one in order to allay any fears or address any concerns.
  • Learn from it – it’s unlikely that you planned for the situation to come about.   Was it a business issue you should have predicted?  A change in the marketplace that you should have flagged?  Had you grown too fat?  Costs gone out of control?  Change in strategy or focus?  Whatever.  Understand it now so that you can avoid the situation in the future.
  • Keep communicating – don’t stop communicating with employees left after the layoff just because the layoff is over.  They need to know why they won’t be subject to similar mistakes or problems in the future.  Everyone wants to work for a winner.  You need to tell them why they are going to be successful right where they are.  Don’t give false reassurances, though, tell it like it is.  This doesn’t mean you shouldn’t sell the positive future prospects for the company.  Just don’t candy-coat the current situation.

I wish I could say that I never had any substantial layoffs in companies that I’ve run, but truth be told, I’ve had to do it more than once.  I’ve also made most of the mistakes above.  It’s certainly not easy and there are almost an infinite number of ways that the situation can get out of hand quickly.  If you use the guidelines above, though, you have a better shot of avoiding the case where the situation gets totally beyond control.

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 July 18th, 2007  
 Will  
 Management  
   
 14 Comments
Aug
09

I’ve Never Fired Anyone Too Quickly

Contrary to how rational and formulaic I may have seemed in my post, When to Get Rid of the “Best” People That Work for You, firing people in a timely fashion has always been the area where I’ve demonstrated my greatest management failures (I’m sure that many who have worked for me might suggest a long list of other actions that qualify for this honor).  I’ve always refused to give up on people, convinced that I could help anyone become more productive or knowledgeable; a better leader or follower; a harder worker or one more dedicated to the task at hand.  I’ve guided, taught, changed roles, adjusted compensation, added stress, removed stress, kicked ass, coddled and tried everything I could think of and almost everything I’ve read to help people succeed. 

In some cases, these efforts were, rewardingly, successful.  In almost as many cases, though, the effort to improve someone’s performance ended up being a complete waste of time and often, regrettably, damaging to the organization.  “Damaging” might seem a bit extreme, but in my view, it’s a reasonable assessment of what happens when a manager takes too long to terminate employees when things have little hope of working out. 

This is what happens: for one of a variety of reasons, an employee isn’t cutting it.  It may be a cultural alignment issue or it might be a skill issue.  In either case, their failings are obvious to many of their peers and co-workers well in advance of when you, as the manager, figure it all out.  So, by the time you take action, the group the employee belongs to is suffering because of their lagging comrade.  It’s not that they want the person cut (although sometimes they do), but they just want you to fix the problem ASAP.  As you work with the failing employee, the entire group is suffering. The longer you take, the more they suffer.  Eventually, their angst about the failing employee wanes and their questions about your management skills grows. 

This is even worse when the person in question has a relatively high-level position.  Perhaps they are a manager themselves or are responsible for some high-level strategy or implementation plan.  While they are failing their co-workers, they are also failing the larger organization that is not making progress towards its goals.  Sometimes, the lack of progress toward the organizational goals is irreparable with respect to lost opportunities or time, which always works against you.

These problems are compounded by the fact that the time you spend in trying to fix the failing employee is distracting you from dealing with your other responsibilities which, inevitably, include working with other employees that also need your attention.  The opportunity cost is even greater than the actual cost of the failing employee, because your distraction with the problem employee creates problems with a much larger number of people.  Productivity falls and the faith placed in you as a manager may be considerably diminished.

Oy vey!

OK, perhaps a little melodramatic, but it’s closer to reality than you might think.  In order to avoid these firing pitfalls you need to recognize the situation when you encounter it and deal with it quickly.  Looking back, I think that there were three reasons why I delayed firing people that should have been fired immediately.

  1. Fear: I was afraid of the psychological impact on the rest of the organization.  I feared that if other employees felt that someone was fired without good reason or that I, as the manager, had not given my best efforts to help that employee improve or adapt, they would question their own bond with and commitment to the organization.
  2. Cost: The costs of hiring and training a new employee are extremely high – especially the opportunity cost.  A fired person, most likely, needs to be replaced, forcing the organization to absorb the costs of hiring for the same role a second time.
  3. Ignorance:  I ignored the obvious signs that the employee was failing and the damage that the employee’s failing was doing to the rest of the organization. 

Only when these people were finally fired did I look back with a Homer Simpson-like “doh!” and realize that in reality . . . .

  1. The best people working with the failing employee knew that he/she was damaging the group and holding them back even before I recognized that the problem existed in the first place.  By the time I actually fired the employee, I was one of the last people to recognize that they had to go.  It’s disappointing when you speak with group members after the firing and consistently hear: “about time.”  Morale can actually increase after a failing employee is fired.  Productivity among the employee’s peers improves and the group’s assessment of the manager’s skills grows.
  2. The costs of hiring a replacement pale in comparison with the cost of the damage being created by a failing employee.  Often the actual damage attributed to such an employee is low.  It’s the opportunity cost damage – the absorption of your time and the energy of the employee’s peers – that is truly costly to the organization.
  3. As a manager you need to look for failure as well as success – a weakness of mine.  Managers, looking for positive signals, often seek out progress and improvement and sometimes neglect signs of failure or imminent failure.  Good managers actively seek out both and find early signals of each.  Failure is a better teacher, but it’s also a more expensive one.  Don’t let that scare you away from looking for it.

Keep in mind that this holds true for people at any level – janitor to CEO.  If people aren’t cutting it, they are hurting the entire organization and need to be dealt with swiftly.  This means that an immediate evaluation of whether or not they can be turned around needs to be made and the second that it is determined that they can’t be made to change (moved, taught, motivated or whatever), they must be terminated.

None of this is to say that you should terminate an employee without making a serious attempt at addressing the problem.  This is critical to optimize your investment in the employee and to demonstrate to others your commitment and dedication to the people that work for you.  Here are some examples of reasonable actions to take if you are addressing a problem with an employee that may lead to termination:

  • Tell them about the problem you see and ask them for an explanation.  It may be something simple.  Discuss the impact of the problem on the entire organization – hold them responsible.  Ask for their help in fixing the situation.  Communicate that the problems need to be fixed immediately.
  • Put them on a formal, written plan.  There are good legal reasons for this (to cover your ass in the event of a wrongful termination suit), but it makes sense as a management tool all by itself.  Make sure you explain the problems you see and what actions are going to be taken to address them.
  • Set metrics – you can’t improve what you can’t measure.  Make everything short term – find ways to get immediate feedback on changes made by the employee.  Align the metrics with the plan you’ve put in place.  Make clear what is being measured and its purpose.
  • Set a deadline and stick to it.  If improvement hasn’t happened according to the metrics you set, terminate the employee.  It’s for the best of everyone.

Nothing here is completely black-and-white and each situation and employee will be different.  In my firing failures, I have let the exceptions override the rules too frequently, though.  The fact is that it is your job as a manager to make your group – no matter how large that group is – as productive as possible and a single failing employee can create huge problems in accomplishing that task.  My experience has taught me that you need to recognize any problems early and deal with them swiftly.  If you don’t, you’ll leave yourself open to the potential of creating some real, long-lasting issues in the organization that may remain long after you eventually fire the employee in question.

 August 9th, 2006  
 Will  
 Management  
   
 4 Comments
Jul
09

When To Get Rid Of The "Best" People Who Work For You

My last post on management, When Firing Someone, Focus On Those That Remain, got me thinking about how organizations function and the role of various types of people within organizations.  Inevitably, some people work well within certain organizations and some work poorly.  Perhaps one of the most interesting facts about this dynamic is that an employee’s ability to work well in any organization and thus, his or her value to it, can’t always be judged by the most obvious measures like individual performance, effort, innovativeness or even productivity.  Of course, this is counterintuitive to most managers who, generally like to judge people in the easiest, most one-dimensional fashion.  Sorry guys, in my experience it’s always been way more complicated than that.

Let me start with a little personal flashback . . . When I started managing people some 25 years ago, I was like most new managers – naive and poorly trained.  Initially, I didn’t have many good role models (although I was later fortunate to be in the position to learn from some incredible managers and leaders) and I ended up being initiated into management the old fashioned way – through trial and error.  I made my fair share of mistakes along the way (as I continue to do today), but remained conscious of the need to learn from them.  Sometimes I actually did.  Usually, though, I had to make the same mistake multiple times before finally discovering what was the cause and what was the effect of anything going on around me.

One of the problems I encountered more often than I’d like to admit took me a very long time to figure out.  It’s the problem of having one of the best people working for me in terms of performance to their assigned task also being a performance black hole for the rest of the organization.  You know the type, they usually consume more of the manager’s time than anyone else; they openly vent disagreements in direction or goals in a negative manner without regard to who’s listening; they spend hours each day discussing all that is wrong with the company or group with people that are not as productive and, therefore, can’t afford that time; and they completely ignore the impact of their natural leadership position by virtue of their high-performance and productivity.

To make matters worse, they are often the people that a manager will rely upon when things are looking bad and schedules are not going to be met.  They are the go-to people and everyone around them knows it.  They are looked up to and have loads-o-power and influence in the organization.  I’ve never met anyone like this who chooses to devote this power to the Dark Side, although I’m sure there are some who make this conscious decision.  Most, however, just do it because it’s the way they are; they believe it’s their place, their right and their responsibility.

As a relatively poor manager, I worked hard to try to make these people use their power for good.  I spent the time nursing and cajoling them at every turn.  I discussed every issue they had, every idea they preferred and every adjustment they felt should be made.  Nothing seemed to change.  I gave them assignments that I thought would absorb them, sent them into the field to work with sales people and customers and gave them tasks outside their group to challenge them in new ways.  As extremely smart and productive people, they handled these new tasks with ease and came back no different before, but armed with more issues and “suggestions.”

It didn’t take long before I realized that I was spending inordinate amounts of time and energy on these people.  This had the double-negative effect of taking up time that could have been devoted to others who could improve given that dedicated effort and no change in behavior from the person who was getting the time and attention.

The first time I ran across such an employee, I bailed out of my managerial responsibility by talking him into joining another group within the company.  While that was far from the right thing from the company’s viewpoint, he was out of my hair and I could get back to advancing my own group.  An embarrassingly wrong thing to do in retrospect.

I eventually figured out that the real problem was a mismatch in culture and values.  I was lost because I thought I could work with a person on the single dimension of how they delivered to plan and schedule – how they got their job done.  I slowly began to realize that this dimension is actually much less important than another one – cultural alignment.

I struggled with this whole concept until I read Jack Welch and the GE Way by Robert Slater.  In this book, Slater discusses a tool that Welch used at GE to determine who the most valuable people in the company were.  It was a four-quadrant chart with a scale representing the employee’s ability to “deliver results” on one axis and that employee’s desire to “support GE’s values” on the other axis.  An employee supported GE’s values, in Welch’s view, when they acted on a set of 8 documented principles plus a variety of other management and leadership approaches – all part of “The GE Way.”

While I didn’t think that the detailed GE Way was appropriate for my small group (or even the entire company I worked for), I did think that Welch’s concept of values translated into my view of the overall culture of a company.  That is, that a company’s culture promotes and supports a certain type of behavior and work ethic, even in its unwritten, undocumented form.  This behavior and ethic becomes the great coordinator of the organization.  Its guiding hand, in a sense.  In the end, when people adopt the culture, they work well within the organization.  When they fight the culture, they fail.  They’re failure is often not only an individual failure – they often can take the people around them down too.

To help myself picture how this works, I made a slight adaptation to Welch’s four-quadrant chart to help me think through what to do about it.  Aside from the change from the more rigid concept of “values” to the less specific idea of “culture,” my adaptation has some slight differences in the actions taken in each quadrant.  Here’s my version . . .

ValuesAndResults

In quadrant 2, the employee is both culturally aligned and productive.  The managerial actions here are pretty straightforward – do everything you can to keep these people and use them as an example for what makes the organization work.  The company doesn’t only gain from what they produce, but more importantly, on how they affect other people – through their success, they promote the culture of the organization and teach others how to be successful within it.

Employees in quadrant 3 are almost as straightforward.  Welch would say that you should punt on these people immediately.  I’m a little softer on them.  There is a reason that you hired them; some ability or spark that you thought added value to the organization.  Put them on a plan, tell them what they’re doing wrong or not doing at all and try to guide them into another quadrant.  I would put them on a very short leash, though, and would not be afraid of firing them or moving them to some other group where they could work out better in fairly short order.

Quadrant 4 is for those people who are culturally aligned but are not producing what is expected of them.  In my view, these people deserve the most effort (the most attention goes to those in quadrant 2 who often need less help to be successful).  Since they are already culturally aligned, the manager only needs to help them become more productive, the easier of the elements to change.  Here again, a plan may be warranted but, in this case, it should be one that is more guiding and nurturing than like an ultimatum as in quadrant 3.

Finally, there are those in quadrant 1.  Again Welch says to get rid of these people immediately.  For some of these people, I agree wholeheartedly.  Others, though, may be worthy of a short effort to move to quadrant 2.  The trick here is that these are the hardest people to fire because they are the most productive AND they are recognized as such by the other people in the organization.  What the manager has to keep in mind here is that while that individual may be very productive, they decrease the productivity of the entire organization.  Their anti-cultural behavior is a drag to everyone else that is almost impossible to measure.

If you consider just the managerial opportunity cost of these people, alone, and try to quantify how the productivity of the rest of the organization could increase if the manager spent his/her time with everyone else, the decision becomes more clear.  Additionally, while there will be other employees that may not understand firing such a great performer, most will understand that this is the right thing to do.  As you continue to weed this type of person out of the organization, the message about the importance of the culture will become clear to everyone that remains.

In my experience, getting rid of people that are not culturally aligned may be one of the most important actions a manager can take to make their group better.  While it is not obvious at first, the group will actually increase in overall productivity by getting rid of these seemingly highly productive individuals.  This gain will accelerate over time, too, as the organization becomes completely aligned with the culture and the people within it are clear about how they fit and what behavior is rewarded.  This all assumes, of course that the the organization’s guiding hand of culture is a reasonable one.  But that would be a topic for another post . . .

 July 9th, 2006  
 Will  
 Management  
   
 25 Comments
Jul
03

When Firing Someone, Focus On Those Who Remain

Firing is hard.  It should be.  First, it only happens because of a failure.  A failure to hire the right person, a failure to train that person well, a failure to create the right motivational or managerial environment for that person or a failure of the person you hire to execute to expectations (note that 3/4 of these failures are those of the hiring manager or company, not of the employee).  Second, it’s likely that you’ll be disrupting at least the life of the employee and, perhaps, the employee’s entire family.  Unless the employee’s done something worthy of Charles Manson or Ken Lay, this factor has to come in to play.  Third, you have to deal with a myriad of various legal and regulatory issues involved with firing someone, making sure that your ass is appropriately covered.  Fourth, and most importantly, you have to put a tremendous amount of time, attention and energy in to making sure that those who aren’t being fired (read: everyone else) understand what has happened and how it effects them.

This last item, while frequently a neglected part of the firing process, is the most crucial part of it.  If by firing a single person you negatively impact the performance of everyone who worked around them, then you’ve failed to achieve what you set out to do – make the organization better by virtue of removing that person from it.  The reason why this part is so difficult and time consuming is that it is the most complex.  You need to understand how the person being fired fit culturally in the organization and work within that space.  Of course, if the person was universally hated, there is no work to do – you’ll be an instant hero and productivity will increase.  If the fired employee was a respected member of the team or even just an average contributor though, you’ll have to deal with inevitable, fundamental and, often, unspoken questions:

  • “What does this mean for me?”
  • “Am I next?”
  • “Is the company in trouble?”
  • “Is this part of a layoff?”
  • “What did the person do wrong?  Am I doing the same thing?”
  • You get the idea . . .

As soon as someone is fired, the lower levels of Maslow’s Pyramid rear their head.  You’ll quickly be dealing with job and life security issues instead of the psychology of motivation and growth.  It is always about “me.”  The time to address these questions is before you fire the employee (that’s the planning, of course, not the actual communication which can only take place after the firing).  If you try to clean up the mess after the firing, you may find yourself trapped in a maelstrom of issues that can take you a long time to unwind and may result in the loss of people that you hadn’t planned on.

To appropriately deal with this situation, as part of your pre-firing planning, you need to consider the organizational impact of the person leaving alongside the obvious process and legal issues.  In this case, I like to get the easier process/legal stuff taken care of first:

  • Map out the process of the employee’s separation from the company – terms of separation, severance (if any), the employee’s last day, transfer of company property, stock option exercise, etc.
  • How you’re going to fill in for the employee’s responsibilities in the organization.
  • Ready all legal paperwork required for the move.

After the easy stuff is taken care of, map out a plan of communication and action to address the fear and uncertainty issues that will remain after the person being fired is gone.  Depending on the size of the organization, consider that you may not be able to handle this effort yourself.  Decide first which people in the organization are the greatest influencers of others (including managers, of course) and communicate with them first.  Since you cannot possibly talk to everyone you need to within the first hours or days after the firing, they will become your mouthpieces for the explanation of the situation.  Time is of the essence, here.  If you fire a person on a Friday, for example, you may not be able to communicate with everyone you need to, leaving them the whole weekend to ponder what happened and why.  Do the deed early in the week so you have some runway.

Additionally, consider the people who will be the most adversely affected by the news.  Prioritize who you need to speak with first, or who may need your personal attention, and make sure you speak with them as soon as possible.  Often, the people at the top of this prioritized list will be the intersection of those that are the most important to your organization with those that may be the most sensitive to that particular employee’s firing.

In all communication, make sure that your explanation is consistent (yes, people compare notes) and is from the point of view of the people remaining with the organization – not your point of view or the that of the person who was fired.  Put yourself in their shoes.  It will not only help them through the situation, but it will get you additional brownie points.  And don’t bail out and have a group/organization/company meeting about it.  It’s impersonal and makes too big a deal about the action.  Be subtle because the way you communicate is as important as what you communicate.

I’m not talking about a week of effort here (although the firing of a high-level person in a large organization may, in fact, take that much effort or more) – most often, it will only require a day or two of planning.  In a small organization, perhaps even just a few hours.  If you execute all this successfully, even the worst firing will be a small bump in the road.  You’ll wonder why you worked so hard to set it up.  Keep in mind that it was because you worked so hard at it that it became just a small bump in the road.  If you think you can get away with less effort, consider how much a lost week of productivity from the whole organization will cost you.  Sounds like a small amount of work now, eh?

Although this process may be easier for the firing of individual contributors as compared to managers, you need to take into account the fact that people come to work every day and build loyalty to an organization because of the people that they work with, not because of their particular job, or job function.  In this sense, the firing of a popular individual contributor may have an equal, or even greater, impact on the organization than the firing of a manager.

By the way, this is obviously all true for layoffs too.  Layoffs just require quite a bit more planning.

 July 3rd, 2006  
 Will  
 Management  
   
 10 Comments