Damien Grant: Just get rid of the dead wood

Non-performers drain your cash, annoy your quality staff and deny a job to someone better suited to the role. Photo / Dean Purcell

Opinion

A lot has been written on staff management. How to recruit, motivate and incentivise good staff.

In our work recovering and turning around struggling businesses, the first thing we do is ask the director to rank their staff, starting at the best and working down.

We then fire the bottom 20 per cent. This has never resulted in a fall-off in output or sales. It always results in improved performance and never fails to reduce the company's overhead.

Some firms undertake this process annually and the term is rank and yank or, more kindly, the vitality curve. Its most famous advocate was Jack Welsh at GE. Most consulting, accounting and law firms practise the same philosophy.

Successful firms also invest heavily in their staff. Law school produces graduates. Law firms produce lawyers, and the best invest hundreds if not thousands of hours on their new employees.

But here is the brutal truth. You cannot teach a dog algebra. Do not try. You will frustrate yourself and make the dog feel stupid. There is a risk that the dog may endure an unnecessary and unwarranted beating.

Get rid of the non-performers. If you are not confident of getting the process right, get outside help.

There are some excellent HR people around. I use the Whitehead Group but any competent employment lawyer can advise you.

There are two reasons why New Zealand employers fail to cull dead wood. The first is because they are weak. If you are not prepared to put your company and the financial well-being of your family before your reluctance to get your hands dirty you should not be in business.

The second reason is an irrational fear of getting sued.

The EMA recently analysed decisions of the Employment Relations Authority. Last year, there were just 189 successful cases in Auckland. (Employees won 61 per cent.) The average award against the employer nationwide is $5184.

Non-performers drain your cash, annoy your quality staff and deny a job to someone better suited to the role.

The ability to fire new employees in the first 90 days means you can risk hiring people who may not look like a younger version of yourself.

But remember, successful firms do not just ruthlessly expel dead-wood. They invest in turning good staff into great staff. The real value in rank and yank is the ranking. Invest in your staff and you will get better staff.

If your employment policy is simply firing the no-hopers, you will be left with a hollowed shell of a business with resentful staff suffering from survivor guilt.

Recently I read Angela Atkins' book, Management Bites. Atkins may not agree with much of what I have said but her book is an excellent guide to improving staff, and every New Zealand manager should read it. And then sack a few laggards.

damien@waterstone.co.nz