The Hindu Business Line : The new 10 pc rule!

In their quest to create a high-performance culture, organisations mandate the identification of the bottom 5 to 10 per cent of employees in terms of their performance against targets or goals set. These bottom performers are given an opportunity to ‘shape up’ or ‘ship out’. Performance management systems differ from organisation to organisation in terms of the forced distribution curve, often also referred to as the “bell curve” or the “vitality curve”.

There are cases for and against ‘pigeon-holing’ people as A, B or C category performers and treating them differently when it comes to rewards and recognition. General Electric and IBM, for instance, have instituted manager training to ensure that this exercise is conducted as objectively and effectively as feasible.

The new bottom 10 pc

In this article, I make the case for a new bottom 10 per cent rule that I believe would go to improve employee morale and engagement. This suggestion is grounded in years of evidence that suggest that employee morale and engagement are vastly impacted by the quality of the managers they work under. An analysis of engagement scores and retention statistics reveals a positive correlation between manager quality and employee engagement.

Research into employee engagement, whether by Gallup or DDI, Hay or Hewitt, all confirm that manager quality is the single most significant determinant of people’s intention to stay or leave and to remain engaged or disengaged.

Shape up or shift out

This new rule involves drawing a ‘bell curve’ for people managers in terms of their people management capabilities and identifying the bottom 10 per cent of people managers, with a clear message: “shape up or shift out”. This is perhaps the only way to continuously improve the quality of people management in organisations.

Core incompetence

Let us understand that managers belong to either of the following categories in terms of their ability to lead people effectively:

Those managers who have a natural flair for managing people and nurture this by building their relationship and leadership skills. People management stands out as their strength and complements their technical skills effectively.

Those managers who may not have a natural flair for people management, but will benefit a great deal from various learning initiatives and mentoring and do a decent job of managing people.

Those managers who neither show a natural inclination nor are able to learn the nuances of managing people despite coaching, counselling and mentoring sessions and continuous feedback from 360 degree and other interventions.

For the third category of managers, people management is a core incompetence! They neither have the inclination nor the motivation to manage people. These responsibilities include building bonds, sharing vision, setting goals, giving and receiving performance feedback, communicating just-in-time, listening and responding to concerns, shaping attitude, addressing career aspirations and doing these in right measure day in and day out.

The new rule suggests that organisations identify the bottom 10 per cent of people managers and give them a clear message to either ‘shape up or shift out’. Shift out, because, these managers may have extraordinary skills in functional /technical areas and therefore could prove to be assets as individual contributors.

Implementing the rule

Effective implementation of the New 10 per cent Rule requires a carefully crafted approach and implementation strategy. Some baby steps are suggested as under:

Develop and articulate a clear organisational philosophy around managing people effectively. Remember this should be an organisational philosophy communicated by the CEO and leadership team and not another HR circular or communication!

Establish or identify a core set of people practices that are non-negotiable for people managers, if they wish to pursue a successful management career in the organisation.

Communicate widely and repeatedly across the organisation to increase awareness and seriousness around the people management function and responsibility.

Institute and institutionalise a process for selecting and training candidates (both internally and externally) for people management process. This would include competency-based selection criteria and development programme.

Ensure that the performance criteria for people managers clearly calls for setting goals and objectives in the area of people management and up-line managers are trained to evaluate this performance accurately and objectively.

Draw a bell curve for people managers based on their performance against people goals and identify the bottom 10 per cent. Communicate unambiguously the organisational assessment and expectations of the candidates. Those who do not improve despite all help from the organisation must be relieved of people management responsibilities and reinstalled as individual contributors. This should be done such that their seniority, compensation, titles and more importantly their egos are not hurt!

Organisations should let their managers know that managing people is an honour that has to be held in trust and with great care. It is not an entitlement that managers exercise despite their abysmal performance in managing people. I believe the new 10 per cent rule will provide organisations with an enhanced ability to deliver on their commitment to create an engaged workforce.

(The writer is Senior Vice-President and Chief People Officer with Symphony Services Corporation.)

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