Extreme prejudice

Replacement premium

The Human Resources military-industrial complex Go Premium The instrument (the “telescreen”, it was called) could be dimmed, but there was no way of shutting it off completely. Index: Click ᐅ to expand: HR Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Now you might be inclined to look at this and think, well, this is a fine state of affairs. By pruning the truly dismal and letting jumped-up and flighty go, we are nicely containing our costs within a tight range. This is depends on your not needing to replace them.

Indeed, in an organisation big enough to have a human resources department you probably don’t — or at least wouldn’t, if you could hang on to staff who were any good and get rid of the grifters. Parkinson’s law obtains.

But if all you have left are the plodders, do not expect them to take up the slack. You will need a replacement, and — unlike the person who just departed — you must per her her actual value. At this point you have categorically worsened your position.

Quid pro quo

The good burghers of HR are no more inquisitive about the underperformers. They should be. Generally, clods are allowed to lie fallow, unfeasibly long periods, languishing in a pool of non-advancement, continuing to draw a poor salary — still more than they are worth — until finally tilled at one of the firm’s irregular mass culls. Here many laggards and no small number of good ’uns, are dispensed with at once, more or less indiscriminately.

Redundancy rounds are a lazy, cowardly way of getting rid of staff you should have actively managed up or out. RIFs let you dress up performance management as ”resource reallocation” — something it really isn’t.

We need to get over the stigma of dismissal. Here, our American friends have the right idea: employment at will. Well-meant formalistic barriers to removing staff have the unintended consequence of increasing barriers to hiring staff, since it is that much harder to reverse a duff hiring decision.

It is mad really: finance professionals are not pit-workers. They have market power and a liberal education: they don’t need the unionised protections. Good staff shouldn’t want them. Good staff erect their own personal defences against termination as they go: their contributions, their expertise, their institutional knowledge and their rich, informal networks.

No firm in its right mind — okay, okay, that leaves out many of them — will fire an outperformer: those in their wrong minds self-harm when they do. This applies, too, to functional diversity. Smart firms will ensure they have it. Firms that doing will go out of business. Q.E.D.

End of day, firms are not a welfare system for their employees. The defence against mediocrity drift is to quickly deal with laggers. The first tool here is discretionary bonus. With this you can bring down cost and push the laggard into the safe zone. If you are flatlining on doughnuts, and you can’t figure out a way of redeploying said laggard, then have the conversation. Be clear, have it early.

Look after what you have

How to stop this? Well, for one thing, focus your attention on your employees who deserve it: the good performers.

Try to stop them leaving. Do this by figuring out why they are leaving. There may be complicated sociological explanations, but for most places it will take no towering intellectual insight to figure it out. In broad strokes it boils down to: money, progression, and quality of work.

Another way of looking at that continuum is this: you pay poor employees more than they are worth to you, and good employees, less than than they are worth, expect to have crappy employees.