There was a company where the relationship between raises and performance was a bit vague. It was clear that promotions generated good raises, however beyond that it seemed that folks got cost of living + a bit whether they had a great or terrible year.
So when the company mgmt conducted a survey, the employees responded that they wanted a Performance and Compensation system that clearly rewarded the good performers and punished the poor performers. The mgmt realized that they would have the same amount of money for raises, so it was just a case of distributing it differently. (ie a few get much more & a larger portion gets less) Due to this they would need to evaluate employees more rigidly and limit the number of larger raises. (ie high performers)
Therefore they created the following:
- A = Super High Performer (~5% of employees) (10+% raise)
- B = High Performer (~17% of employees)(~7% raise)
- C = Normal Performer (~67% of employees) (~3% raise)
- D = Needs Improvement Performer (~7% of employees) (0% raise)
- F = Poor Performer (~3% of employees) (FIRE)
Well at the end of the year, many of those that saw themselves as A's and B's were shocked to find that they were actually C's or D's in their Supervisor's opinion. So instead of getting a BIGGER reward for their hard work, they actually received less since the A's and B's got more.
Also, the softer Supervisors were crushed that they were forced to identify and deal with their poor and needs improvement performers. Firing people and dealing with conflict were hard for them. Besides wasn't it unfair to have to cut ~3% of the employees per year? Also, who will we get rid next year?
What should we learn from or discuss with regard to this story? Good or Bad Idea?
4 comments:
What follows in IMHO.
I don't like big raises within a position, 5% tops. Make that person a Senior Dogwasher with than 10% raise.
As for the "D" group, if you don't think they're worth saving, fire them now. Often, they're just in the wrong job, so make a good faith effort to transfer them.
But if they are worth another chance, say so, but give them that 3% raise. That avoids peer and home issues that can scuttle that hoped for improvement.
I don't see why you fire anybody. If you give out bigger raises to the top performers and smaller raises to the low performers, eventually everybody gets to the "right" pay for the performance they are able to deliver. Training and coaching, plus things like good mutual objective-setting can make almost anybody improve and thus achieve that point sooner.
J. Ewing
It's ultimately unfair to everybody to keep marginal performers, including said marginal performer. Move them a step closer to a job that better suits them. Rush Limbaugh was fired, what, seven times?
There are many reasons to terminate or demote an employee, most revolve around aptitude and attitude.
The aptitude situation can arise if the wrong person is hired, the job changes and now exceeds the employee's capabilities, or an employee is promoted beyond their capability. (ie peter principle) They simply can not do the job...
The attitude situation can arise if the employee becomes burnt out, their interests shift, their emotional baggage gets in the way, etc. Yet they are too scared to leave their financial comfort zone in search of a better fit. They either choose to or unable to do the job...
Another attitude situation can arise when the employee does a great job, even with their poor attitude. However their attitude begins to poison the attitude and damage the performance of others. One bad team member ruins the whole team...
Now I am not saying, "fire em immediately". However after some effort to remedy the situation. A manager owes it to the other employees to cut the dead wood loose and lighten their burden.
This is why I get so frustrated with the Union Teachers. The dead wood teachers are damaging the professional standing of all Teachers, hobbling the learning of children, reducing the income of all Teachers and making the jobs of all Teachers harder. Yet they keep protecting the dead wood out of fear that they may be the dead wood someday...
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