Culling just isn't cricket...

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Know and love America as I do, there are occasions when I have to gently point out that some things American don't play too well this side of the Atlantic. Here's one: US investment banks have a habit of culling large numbers of their staff every year for so-called underperformance.

As we say over here, it's just not cricket, chaps.

The bastion of gentlemanly employment, the Bank of England, is on track to adopting a practice more in keeping with the culture of Morgan Stanley or Goldman Sachs - the Bank has decided it too will fire the 'bottom 5% of its staff every year'.

1,800 employees at the Bank face their annual assessment in December. So with echoes of Ebeneezer Scrooge resounding through the august halls of the Old Lady of Threadneedle Street, the unhappy ninety deemed to be underperforming will be told to pull up their socks - or face the sack.

If they don't haul themselves out of the 5% bear trap, they won't receive their annual pay rise; they will be put on a year's notice and be forced to undergo three-monthly reassessments. Those who can't turn the situation around will be fired without redundancy payments. Those who can - mopping their feverish brows with relief, one imagines - will make room for some other poor souls to join the doomed ninety.

What's wrong with that, I hear you ask? The US banks are hugely successful profit-producers simply weeding out those they consider to be failing. No argument there - but I'd like to challenge the dogma that says that 5% of your employee population is truly failing each and every year.

I don't have a problem with banks shedding persistent underperformers. I do have an issue with them deciding to stigmatise an arbitrary number of their employees as duds.

I also struggle with the notion that it can benefit the bottom line when you count the cost of recruiting these people, training them, the high cost of 'letting them go' and then the subsequent expense of taking on and training a whole new raft of employees, before doing the same thing again next year.

This is to say nothing of the damage such practices do to staff morale. It might be a management tool to 'treat 'em mean to keep 'em keen,' but it won't breed loyalty or confidence among the survivors. And if you want an employee to depart your organisation feeling thoroughly disgruntled, by all means give him his marching orders while branding him a loser. (Or her, of course).

A failure of performance management?

Roger Tynan, employment partner at Campbell Hooper Solicitors, poses the question: "Why is it that at any given time, 5% of the workforce is considered to be underperforming to the extent that it is thought appropriate to put them on notice?"

He questions whether this approach indicates a wider malaise within an organisation, and a failure to provide a sufficiently challenging and rewarding working environment. "If this is the case, why aren't staff being coached and offered training to realise their potential contribution?" Tynan asks. "Such an extreme response surely demands reflection on why conventional performance management techniques have failed."

I was under the impression that sustained high turnover of staff indicates a badly run company. Has anybody actually proved it's productive to shed so many each year? Cost effective? Where are the performance pundits championing such behaviour?

A flawed selection process

Appraisals can be skewed to suit hidden agendas in a host of ways. Does the appraisal system exist which is wholly objective? I hear plenty of horror stories of axe-grinding colleagues hunting in packs to protect their own status and salary at appraisal time, cheerfully sacrificing co-workers. How then do you justify shedding staff in such large numbers when the means of assessing them is so far from perfect?

Philip Beddows, director at business transition and HR advisors, the Rialto Consultancy, believes that an inherent problem lies in managers failing to communicate effectively: "Too many organisations only really deal with performance at appraisal time, rather than keeping it a continuous dialogue between line managers and their teams."

In order to get the best results, good managers know that they have to be team coach as well as team captain, committed to orchestrating the team's combined skills into a harmonious whole - all year round. Managers should manage, in other words.

"I believe that every human being has valuable qualities, and most have a talent - a percentage of which talent never sees the light of day. The trick lies in identifying it in the individual, and perhaps realigning the person's role to take advantage of it," says Beddows. "Many managers tend to duck issues not directly concerned with their immediate P&L. It's easy to forget that leadership and management are two different things - but that you need both for consistent success."

So maybe the answer is to chuck the managers who aren't managing into the underperformers' pit and threaten to fire them if they don't start doing their job properly.

If any HR directors out there can persuade me that shedding 5% of the workforce every year is a proven effective means of managing a business, dealing fairly with employees and producing profits, I'll buy you lunch. You have to prove your point with statistics and solid evidence, however. I promise to write about it if you do.

Until such time as any appraisal system can be refined to the point where it is truly objective, I think British institutions should stick to indigenous hiring and firing practices in preference to adopting the 5% cull.

How long for? Well, how about until the day cricket is as popular as baseball in the US?

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