The Idea in Brief
How to sustain a 23% annual shareholder return? Push your growth rate from 4% to 10% in one year? Triple your market capitalization in three years?
Clothing retailer The Limited, SunTrust Banks, and high-tech firm PerkinElmer, respectively, accomplished these feats by aggressively replacing their C players--people delivering barely acceptable results--with A and B performers.
C players' mediocre performance pulls down their company's performance by:
- blocking talented employees' advancement,
- calling their bosses' judgment into question,
- encouraging a C-player mentality in others, and
- repelling valuable people.
Confronting these folks is painful. Fear of litigation, or the belief that an organization should invest indefinitely in people, can further stymie the process.
But to continuously strengthen your firm's talent pool, you must confront them. By improving--or removing--C performers, you boost company morale and performance. And since letting people languish in a job where they're not respected only hurts them, moving C players up or out may even help them.
The key? Use an iron hand--a disciplined process--clothed in a velvet glove--fairness and respect for these employees.
The Idea in Practice
The Iron Hand
Use this disciplined process (conducted at least annually during division talent-review meetings) to regularly remove low performers from leadership positions:
1. Identify C performers.
- For each position, define goals, desired skills, and behaviors consistent with company performance goals.
- Establish a simple performance-level rating system--e.g., A, B, and C.
- Distribute people across the ratings. To ease the process, include 3+ senior managers in the discussions, and encourage robust debate about the performance improvements the company needs. Gather multiple viewpoints: Use 360-degree feedback, self-assessments, and interviews with subordinates. If managers balk, remind them of the objective: to continuously upgrade the talent pool, raising everyone's game.
2. Agree on action plans.
- For each person, ask questions such as: "Does he want to improve? How much warning has he already received? Does he have valued skills?"
- Select one of these actions: Improve his performance to at least a B; move him to a better-suited job; or fire him.
3. Hold managers accountable.
Require managers to implement action plans within 6 to 12 months. Frequent, casual inquiries, advice and encouragement, and formal reviews or tracking systems reinforce the importance of talent management.
SunTrust Banks bases 20% of bank heads' bonuses on how well they meet talent-building goals stipulated in their annual reviews--which include objectives for managing low performers.
The Velvet Glove
Treat C players with fairness and respect:
Deliver candid feedback regularly. Tell C managers about their strengths and weaknesses. Explain how they must improve--in writing during performance reviews and informally throughout the year. Termination shouldn't be a surprise.
Coach. Articulate specific goals and timelines for boosting performance.
Provide generous separation support. Besides money, offer outplacement services, counsel and job leads, a job-search office, and secretarial support. You'll lessen the financial hardship, anger, and legal risks that firing can raise--and help C players exit with dignity.
Copyright 2002 Harvard Business School Publishing Corporation. All rights reserved.
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- See more on Leadership and Managing People at Harvard Business Online.
Further Reading
Articles
Harvard Business Review
November-December 1996
by James Waldroop and Timothy Butler
If you decide that a particular C player is worth keeping, coaching will be essential as you set out to recoup your investment in him. The authors describe a process for defining the individual's performance problem, determining how severe it is, and using coaching techniques to improve matters. The article includes specific questions to ask during coaching meetings and concrete guidelines for how to word your comments and questions to ensure as successful an outcome as possible.
The CEO as Coach: An Interview with AlliedSignal's Larry Bossidy
Harvard Business Review
March-April 1995
by Noel Tichy and Ram Charan
Larry Bossidy--successful chairman and CEO of aerospace, automotive, and chemical supplier AlliedSignal--would agree with Axelrod, Handfield-Jones, and Michaels that "making people as good as you can make them" constitutes a key responsibility for any CEO. Corporate leaders, Bossidy maintains, can influence just three things: people, strategy, and operations. In his advice for managing people, Bossidy affirms principles similar to those described in "A New Game Plan for C Players"--including regular, direct, and written performance appraisals; the removal of people who are hurting the company--but only after you've given them a chance to improve; and smart hiring.
Getting 360-Degree Feedback Right
Harvard Business Review
January 2001
by Maury A. Peiperl
Getting 360-degree feedback is one valuable way to identify your company's C players. Indeed, this form of feedback has revolutionized performance management. But one of its components--peer appraisal--can stymie executives, exacerbate bureaucracy, heighten political tensions, and consume huge quantities of time. Peiperl explores several paradoxes that underlie these realities--such as the Paradox of Roles (colleagues must juggle being both peer and judge). The author contends that managers who understand these paradoxes can better use peer appraisal to improve their organizations.
Books
Harvard Business School Press
2001
by Ed Michaels, Helen Handfield-Jones, and Beth Axelrod
Improving or removing your firm's C players is a vital part of upgrading your talent pool. This book examines the larger context of talent management--which includes embracing a talent mindset, crafting a winning employee value proposition, rebuilding your recruiting strategy, weaving professional development throughout your organization, and differentiating and affirming your employees. Together, these changes help you attract, cultivate, and retain the individuals essential to your firm's success. Many people relegate talent management to HR; this book shows how every manager can contribute to their company's talent pool and ensure its strategic advantage.
