Should you fire the bottom 10%?
Former CEO of GE Jack Welch’s famous policy of firing the bottom 10% of employees was intended to optimize human resources. But are there better ways to ensure your workforce is optimized?
It is important to make necessary upgrades and adjustments to ensure your business is running like a well-oiled machine to support growth and success. Ultimately it’s your people that make your business “go”. They give it life, adaptability, innovation, customer service and personality.
If you were to rank your employees you may find the bottom 10% are costing your business in lost productivity, can promote negativity in the office, breed incompetence and are likely not treating your customers right.
There is value in having a clear discipline for quickly culling nonperformers. Labour is expensive and to manage a profitable business it makes sense to ensure your human resources are continually optimized.
However, in the case of the 10% rule it is more likely your hiring process that needs to be adjusted.
All businesses want to hire only top performers. However, this is not as easy as it sounds! What an applicant says in an interview often has little relation to their capability.
What they actually do when you “take them out on a test drive” is far more reliable. You can achieve this by hiring people based on a performance measurement or ‘audition’. This could be a sample of test questions or a project proposal, so that you can evaluate an applicant’s actual capability more accurately.
Alternatively, after hiring an applicant there is a probation period. Let your applicant know their long-term employment will depend on this evaluation period. Ensure you measure their performance over this period and if they are not meeting the standards set by the business, then they shouldn’t pass probation.
Ensuring you have the best people on board is important for your business to reaching its full potential. While firing the bottom 10% might ensure you retain only the best people, it’s far better to not hire the bottom 10% in the first place.
If you would like more information around integrating HR best practice with your organisation’s strategic objectives, please contact ESV’s HR Manager Danica Burns on 9283 1666.
Article by Edwina Ring