Up and out. Fire the bottom 10%. You know the drill: the Jack Welch rules...
Henry Blodget asked a similar question at the Business Insider, a Wall Street digital publication:
Netflix does this.
Importantly, Netflix believes in paying "top of market" for all of its A players. In other words, it pays them as much or more than any of its competitors would pay them. To its credit, Netflix also tries to pay its A players top dollar BEFORE they get an offer to leave. So Netflix is using both carrots and sticks: If you can earn and keep your place as an "A" player, you'll be handsomely rewarded for it. If you can't, then you'll be free to work somewhere else.
So, should we sack everyone who is just doing an "adequate" job?
I find Netflix's logic very persuasive (especially the part about being a team, not a family), but I do have some lingering doubts. On the one hand, I absolutely want us to build the strongest team we can--one composed entirely of "A" players. I want to reward the A players by making them feel appreciated and rewarded, and I don't want to demoralize them by having them feel like they're carrying the "B" players' dead weight. (We don't employ "C" players for long).
On the other hand, unless this policy is spelled out clearly ahead of time (which it certainly could be) it seems harsh to inform a dependable if uninspiring B player that they're doing an "adequate" job--and, therefore, that they're done. We therefore try--probably for longer than we should--to help the "B" players become "A" players. Unfortunately, as companies like GE and Goldman Sachs have long known, it doesn't always work. (GE and Goldman fire 5% of the workforce every year, just to keep strengthening themselves)."
It's sexy to think you can achieve what Henry is outlining, but let's think about this for a second. The much discussed GE policy of firing the bottom 10% is the BOTTOM 10%. What Blodget is describing, and what many of the Netflix presentations allude to, is that we shouldn't tolerate "meeting" expectations. That means a WHOLE bunch more employees than the GE policy of the bottom 10%.
Of course, it all depends on your Bill Clinton-like "definition" of meeting expectations (I did not have... never mind). And a bunch of other factors you can find people talking about by clicking through to read the comments of Blodget's post and looking at this discussion over at the HR Technology Conference LinkedIn group.
You want to fire your adequate performers because they're not stars? Random thoughts:
--Your best people are the stars, and those below their performance level are "adequate". How's that compare vs. what you'll find in the marketplace of candidates?
--Your job is to migrate adequate performers to star status. How ya doing on that? How are your front line managers doing on that?
Whoops. Maybe you're not ready to fire the solid - but not star - performers after all.
It's tough when a theory that's cool doesn't transfer to what you can use. I wish the real world would just stop hassling me.