In recent months the business press has been filled with stories of the weak performance of General Electric. Many comparisons have been made to the lack of leadership in the last 15 years versus that which Jack Welch provided during GE’s glory years in the 1980’s and 90’s. One of the most controversial aspects of Welch’s time at GE was his so-called “rank and yank” procedure, where he would fire the bottom-ranked 5-10% of his managers each year, regardless of absolute performance. He earned a reputation for brutal candor. He rewarded those ranked in the top 20% with bonuses and stock options.
While the whole topic of ranking employees based on short-term performance and long-term potential is quite controversial in the HR world, the fact is every organization should be working hard to keep the strong performers and also facing the fact that there are some people whose performance consistently lags versus the rest of the organization. Some leaders seem to be able to do this balancing act well and others don’t. One very clever way for measuring individual manager’s performance in the development of people is to define bad attrition and good attrition.
Specifically, attrition, defined as people leaving the company, is generally viewed as a bad thing. But wait a minute. In just about any organization of some size, there are some poor performers and some superstars. When a superstar leaves, the chain-of-command of that superstar should be held accountable for that unfortunate loss. In fact, that is bad attrition. On the other hand, when a chronic weak performer leaves, frankly that is good news. Sometimes that exit is voluntary, and sometimes it is involuntary – you ask them to leave. In either case, it is good news. It is good attrition.
Here are the basics of a measurement system that should be put in place in any sizable organization to make sure strong performers are treated positively and the weak performers are dealt with:
1.) Analyze the Departures – Each year the HR organization should publish for any sizable division/group within the company, the number of employees that have left, and then break that down into the percentages of good attrition and bad attrition.
2.) Bad Attrition – If the bad attrition is not zero percent, carefully go over with that manager the superstars that were lost and why. Forcing managers to do this kind of in-depth analysis of why they lost some really good people is very important in terms of uncovering what it is the manager should be doing differently in the future to get that percentage down to zero.
3.) Good Attrition – It’s vitally important to deal with the weak performers. The percentage of people that fall into this category should not be zero. The human tendency is to let such people stay on for yet another year to see if they can turn things around. That’s what leads to a disappointing zero percent of good attrition.
Talent management is critically important, and good and bad attrition data is a valuable tool that should be used by any leader.