Ready for ugly?
Unemployment has reached 7.6 percent, up from 4.9 percent one year ago.
Ignore this statistic. It counts only those actively looking for work — not a particularly useful metric. More interesting is the employment level, down 4,218,000 adult Americans in the last year.
It’s interesting if you’re among the unemployed, less because misery loves company than because who needs this much competition?
And it’s interesting if you’re a CIO, because with this many people out of work, there have to be opportunities to hire great people.
Hire? In this economy? I’m kidding you, right?
Well, no, I’m not. If I were kidding it would have sounded, if not funny, at least funnier. There’s nothing at all funny about what I’m about to suggest. It’s ugly.
It’s time to hire. Here’s why.
We’ve known for decades that the best employees are at least ten times more effective than average ones, both from Frederick Brooks and your own personal experience.
Since you pay your best employees no more than twice what you pay the average ones, your best employees are, from a financial perspective, a bargain.
Do whatever it takes to keep them. If one leaves for any reason, your chance of finding an acceptable substitute is small.
But first you have to know who they are. To find out, steal a page from the star-performer research Kelley, Caplan and Hayes performed at Bell Labs more than a decade ago. Here’s how:
Put each non-managerial employee on one of three lists. One contains your exceptional employees, the second contains the strong performers, the third includes everyone else. Involve your managers in the exercise — they know more about the department’s employees than you do, or should.
Then ask every employee to list the ten they consider exceptional. You don’t even have to sugarcoat your explanation. Just tell everyone there’s no certainty as to where the bottom is, and you’re making sure that no matter what else happens, the department keeps its best people. You value everyone’s opinion as to who qualifies, and employees who are hands-on with the department’s work know things you don’t.
Compare the lists. Anyone staff and management both consider exceptional probably is. Anyone on one list but not the other deserves at least a strong performer rating.
Right now, as a matter of cold-hearted business tactics, you should consider replacing everyone else. The reason is simple math: You can get more for less, because some of your competitors in the employment market are, not to put too fine a point on it, fools.
Take advantage of them.
You know and I know that any number of mediocre leaders mistake getting along with strong performance, while considering employees who make waves to be undesirable troublemakers. When they have to lay off staff their troublemakers are the first to go; the employees they personally like the best are the ones who get to stick around.
That means exceptional IT professionals are pounding the pavement right now, waiting for you to find them.
Except you can’t, because your labor budget is already under excruciating pressure. You’re already in the middle of planning a round of layoffs. Maybe you’ve just finished one, and already are quietly creating contingency plans for the next.
The popular complement to layoffs is reducing the cost of an average employee, either by moving work offshore or by replacing seasoned staff with younger and hungrier substitutes. You might manage to cut costs by as much as 15% this way, while demoralizing everyone, losing invaluable institutional knowledge, and reducing your ability to get work done.
Replace your sledgehammer with something more subtle. Lay off three acceptable employees and hire one who is exceptional. You can pay premium wages, get just as much work out the door, and reduce your labor budget much more.
In ordinary times this strategy doesn’t work — there isn’t enough exceptional talent available to you, and the disruption to working teams would be more damaging than any likely improvement in individual performance.
These aren’t ordinary times. Layoffs are already disrupting your teams, and outstanding IT professionals are pounding the pavement, concerned about foreclosure or worse.
It’s that bad out there, and your budget isn’t pretty either. Triage, while not pleasant, is necessary. If you’re direct and honest, employees will understand and accept this, even as they mourn the departure of friends who are perfectly acceptable performers.
Nor is this as heartless as it sounds. The laid-off superstars outside your door deserve gainful employment just as much as your current employees do, after all.
Don’t they?
Excellent column! The ideas you express are counter intuitive to most people, especially those making management decisions. In addition, even if your ideas were put into practice, most organizations do not have the ability to distinguish who the exceptional employees may be. Since technology is not the forte of those doing the hiring, more superficial criteria is often used to select a candidate.
In the eyes of most companies they do, as long as they’re under 40 (or is that under 30?). Is my bitterness at not being able to get a job because of my age showing again?
Bob – Another great piece. To prove the fallacy that you can succeed by jettisoning your knowledgeable, experienced (and more expensive) employees, and replace them with less knowledgeable, less experienced (and less costly) folks, let’s just cast a glance at the soon-to-be-late Circuit City. I’m convinced that particular move was the catalyst for the vortex of failure that eventually consumed the company (and no, I didn’t work there, just liked the place). The forced departure of their most knowledgeable folks left a sales force that lacked product knowledge, retail experience and credibility, and that quickly developed a deserved reputation for less than stellar product recommendations. Word spread fast, customers voted with their feet and you know the rest of the story. Many of us will learn from the Circuit City debable; sadly, many of us will not.
Thanks for listening. And writing.
Carter Chamberlin
Bob, this advice is plutonium. It’s a powerplant for people who have certain skills and talent at their disposal, but more than likely it’s a huge environmental disaster waiting to happen. The whole plan hinges on recognizing good candidates, and in this case you are specifically talking about good candidates that aren’t outwardly obviously good candidates.
I mean really, you have worked for a company that thinks they are in the perfect position to maximize the outcome of this strategy. That company will also spend a lot of time and money screening candidates, and hire the ones that give warm fuzzies to the commitees that perform the group interviews.
I imagine there is a lot of advice you give your clients after you have evaluated them, and know for sure they have the ability to properly use that advice. I think this column falls under those criteria. I hope the majority of your readers read this and realize they are not up to the task.
You should at least link to your column from the last recession that suggested experienced IT pros go into contracting, and people looking to hire in this market try before they buy – by hiring candidates willing to start with contracts.
Sorry, Bob. I agree with much of what you write, but I disagree with this one. Every I/S department I’ve seen certainly manages to retain a little dead wood over time, and these folks are certainly candidates for replacement. But to eliminate what you refer to as “acceptable employees” and replace them seems rather heartless to me. I’d be willing to bet that the reason they are only “acceptable” is because they don’t have challenging assignments, have a limited personal training budget, and at some point have pissed off someone at a higher level with a long memory. I’ve known people who were only average performers at one company but become great performers at another. If a company has a bunch of “acceptable” employees and no superstars, I’d point a finger at management who have been less than stellar at developing talent.
Interesting article. To a company, however, most employees are expensive; to an employee, most companies are parsimonious.
As someone who’s hunting work (and has been as high as CIO), I can state that the current market has companies looking for cheap candidates, and, as a previous commenter noted, warm fuzzies.
Ability in IT is hard to measure in an interview. It’s production experience that counts. I’ve got years of the latter, but the nature of experience is that evidence of experience can not be transferred, only records of productivity and effectiveness, which can be – pardon my bluntness – forged with buzzwords on resumes.
Since I’m not a manager, but have been at the wrong end of foolish managerial decisions, I love your column because it helps me understand what I need to look for in a workplace.
I left a good job recently for another one where I misread what the new employer wanted … which was a yes man team player. I am not that kind of person.
My boss was making every architectural decision on the very complex software, and assigning tasks to solve problems in overly defined ways, and deliberately keeping each programmer in the dark about anything else in the code.
The code he was forcing each of us to write was infested with just about every code smell you could think of. Small changes almost anywhere in the code caused things to break elsewhere in highly unusual ways. There were no objects, no data layer, no display layer, just a mass of VB3-style spaghetti. There were horrible architectural decisions that were apparently locked in stone causing enormous layers of complexity to be added to make things work.
We had to endure meetings where he did most of the talking and assigned our “agile” programming tasks of the week.
I didn’t force the issue this time. I just asked to be let go and found another position where my boss is smart enough to give me some leeway to find a good solution to the issue. He doesn’t know very much in specific about how the software works, but he trusts each of the six employees in our department to do their best to improve the code.
I have been able to remove about 2/3rds of the existing interface code base and improve functionality in the six months I have been on this job. I could have done the same for my previous boss if he would have only allowed me to make some of the decisions for him, with his oversight.
I am making somewhat less in this new job than in the unhappy job I left, but I think my long term prospects are much better because we are writing good code that works and is easier to maintain.
Even in this economy with reduced profits I was surprised to find a very nice bonus deposted in my account by my new boss, even after less than six months of work. I feel like I’m in the right place because I have an employer that trusts and respects his team.
Too bad we can’t find a way to replace the “everyone else” managers above us with exceptional ones!
Who are these people kidding? “Empowering people” is just another phrase for I don’t want to take responsiblity. We have time to work on their pet projects, when they should be focusing on what is essential to get the business through this downturn.
Drop low performers and hire high performers.
Sounds like heresy. Only sports teams do that, find the very best at each position.
Biz managers say that keeping exceptional performers means you end up full of malcontents, and those folks cannot form a team. Except of course they do, at least for good coaches.
Granted, it is easier in sports because the goal is clear. And that probably is the reason it tends to fail in business–the managers are inept and fail to make the goal clear. If we’re all working toward the same goal, then arguments are usually about how to get there fastest and coaches brush off sideline discussions with excited players, realizing they simply want to be on the field. But if we don’t know what the goal is (or the idiot CEO says we have ten of them and refuses to prioritize them), then arguments are obviously delays so the best thing to do is get rid of the folks who argue.
i.e. This is simply a defense/excuse for the ones who keep the get-along types–they are the best performers in organizations that aren’t clear about what they wish to perform.
This is a hard message you have written, but you are right and the wise leader and manager will gain by it and the organization prosper. No one wants to cut “good” employees and leave them out in the cold to fend for themselves. I like you too lists approach in decerning the exceptional employees. Management has an obligation to enable survival of the organization and those most fit to lead it when things turn around. I have resisted the commodidization of human capitial, but in reality it must be managed to best ensure the survival of both the employee and the employer. It is not a fun job, but a necessary one.
The key is to not create victims. How do that and accomplish the task is where management becomes becomes great. With heart and good judgement there is a chance to create multiple win-win opportunities that otherwise may be lost.
Well said, but not a popular position. Another technique investigated at MIT Sloan School in the 1980’s: prepare a communications log of all internal telephone calls and personal visits (for business). Who talks to whom. Diagram a plan view of all communications. You will usually see who everyone goes to for opinion/advice. They appear as the center of a star. They are rarely supervisors, but everyone thinks of them as the guru. They are always underpaid, never considered as management material, often considered as rebels (as you mentioned), and irreplaceable. You should treat them like kings, but do NOT make them part of management. Give them a technical promotion like “consultant” or “principle” and a raise. Whatever you do, don’t require them to attend but offer them the opportunity to join management meetings. Above all, consult with them one-on-one and listen when they speak.
While this article makes a compelling case, it would appear to be more theoretical than practical as we all know the difficulty in identifying and hiring these exceptional employees. How do you counter the risk of letting three average people go and then finding that your exceptional hire who interviewed terrific and had all sorts of credentials, turns out to be a dud ?
As always, Bob, your thoughts are well worth reading. Thanks for being the gifted person that you are….
Ah yes, to hell with loyalty to anyone or anything. It never inspired performance anyway. Or did it?
You know and I know that any number of mediocre leaders mistake getting along with strong performance, while considering employees who make waves to be undesirable troublemakers. Except that sometimes the employees that make waves are undesirable troublemakers. Sometimes a good performer that does not integrate well with the group produces well on his own but reduces the productivity of his co-workers by his poor customer service, unwillingness to share knowledge, etc.
Great Idea. How timly. I just completed a survey for the company, they are trying to figure out how to attract the best. Survey was basically, me ranking different categories that attract people. Sure seems a lot more complicated then it needs to be. Just look for the best people and hire them. In the meantime, empower employees; stop the Nay Sayers!!!
This is good stuff, Bob. It makes a lot of sense but, if I’m being honest, It’s just a little too ruthless for me. Maybe I can get there someday but, to my way of thinking, if you’re an alright performer but you’ve got a great attitude and contribute to the team in a positive way…you can stay. I just think there’s so much more than just being a great “performer” (presumably you use that word to mean someone who has a lot of accomplishments.”
As for “undesirable troublemakers,” I don’t have much tolerance for them. I don’t care how smart you are or how much you accomplish. If you cause me a lot of grief and are disruptive to the organization then I’ll have to pass. Why? To throw it right back at you, there are too many exceptional performers out there that aren’t undesirable troublemakers for me to have to put up with it. So you see, it’s really a balance. Just like most things, it’s best to stay away from the extremes.
Still a great post, Bob. Very thought provoking!
Bob:
Good article but you left out the most important part.
It is not difficult to determine exceptional employees among the group actively working at a company but it is much more challenging to determine who might be an exceptional employee from the pool of potential hires. I have seen many new hires turn out to be average or even below average employees rather than the “exceptional” employees that were expected.
Do you have any guidelines to offer on how to spot and hire those exceptional employees ?
Thanks – Dave
It’s a fine idea in theory, but it assumes the interviewing process can sort the OK from the exceptional.