Winning (10 page)

Do people really learn at the end of it what they must do to improve their performance?

Only integrity can keep evaluation systems from becoming paper-pushing. And since there is no law to make it happen, and no audit team either, it is up to every boss giving an evaluation—with the vigorous support of HR—to take this responsibility upon himself or herself.

You won’t get thrown in jail if you don’t, but do it anyway because it will make you and your team better.

I’ll never forget the time I was at a meeting about how GE should reward the winner of the Steinmetz Award, given annually to the company’s best scientist. I was a group VP at the time, and so my ears really perked up when one of the vice-chairmen, a guy with a lot of stature and a lot of dough, registered his opinion.

“These people don’t want money,” he said, “they want recognition.”

He must have forgotten where he came from!

Of course, people want to be recognized for great performance. Plaques and public fanfare have their place. But without money, they lose a lot of their impact. Even the Nobel and Pulitzer prizes come with cash awards.

If your company is managing people well, it tightly aligns good performance with rewards. The better you do, the more you get—and you get it in
both
the soul and the wallet.
*

There is hardly anything more frustrating than working hard, meeting or exceeding expectations, and discovering that it doesn’t matter to your company. You get nothing special, or you get what everyone else does.

People need to get differentiated rewards and recognition to be motivated. And companies need to deliver both for retention.

It’s that simple.

Take the case of a woman I know who graduated with a degree in theater design from an Ivy League college and eagerly went to work as a buyer at a prestigious New York City retailer. Despite the grueling hours and low pay, this woman showed immediate promise. Her selections for the sportswear department broke sales records for six straight quarters, and she managed to repair the store’s relationships with two disgruntled vendors. Although it was not part of the job—and other buyers teased her for “overdoing it”—she worked the floor and the cash register to better understand her department’s customers.

For two years, this buyer got very little public recognition for her success. That was bad enough, but her bonus was also standard—exactly what the company described as average during the interview process.

She had to quit to find out how much she was valued. When she handed in her resignation, her boss was shocked.

“But why are you leaving?” she asked. “You have a great future here!”

“It’s so draining—no one ever tells me I’m doing a good job.”

“No one ever tells
me
I’m doing a good job,” her boss shot back. “That’s just the way it goes here. You’ve got to get a thick skin.”
*

Retail is a notoriously tough working environment. But the practice of not rewarding performance is commonplace in plenty of industries and one of the main reasons good people leave.

A winning company does not let good people walk out the door for lack of recognition, financial or otherwise.

Another key way to motivate and retain is through training.

If you’ve hired the right people, they will want to grow. They will be bursting with the desire to learn and do more. A good machinist will want to know how to operate more machines and eventually how to run the shop. A good manufacturing engineer will want to travel to Japan to visit companies using advanced techniques that he has only read about. A good PR person will want to learn how to communicate more effectively on the Web.

Good people never think they have reached the top of their game. But they’re dying to get there!

A company that manages people well helps make that happen. If it can afford it, it has in-house training led by its own executives, who serve not only as teachers but as role models. A company with fewer resources can facilitate training outside at any number of good programs. In either case, it makes sure that training is seen as a reward for performance, not a sop for time served.

Companies cannot promise their people lifetime employment. Global competition is too fierce and economic cycles too frequent for any such guarantees.

But they can promise to give their people every chance for employability—skills that will make them more attractive if they are forced to part ways.

Like rewards and recognition, training does that. It motivates people by showing them a way to grow, that the company cares, and that they have a future.

If you are doing it right, they will want to make that future with you.

Like families, companies have relationships filled with history or fraught with tension.

But managing people well means paying special attention to these hard relationships, not just letting them fester or float into neglect—approaches that are entirely human but often end in a mess.

Good people management requires companies to confront their charged relationships with candor and action.

Let’s start with unions.
When I was at GE, it was well known that I was not a fan of unions. I thought they created conditions that made the company less competitive, and they drove an unnecessary wedge between management and employees.

I use the word “unnecessary” because in my experience, unions arise only when a plant or an office is being managed by someone who is abusive, remote, or indifferent, and whose actions have taken away the voice and dignity of employees. Without a doubt, that boss needs to be reformed or removed because unionization is an excessive response with negative long-term consequences—really for everyone.

We did have several longtime unions at GE during my time as CEO. I always felt our relationship was candid and respectful, and we never had a national strike. I can think of two reasons why.

First, we always stated our principles and stuck to them, and second, we never started our relationship at the negotiating table.

Principles first.

The most important thing to remember about unions is that they are made up of your own people. You work together, reside in the same towns, and oftentimes your kids go to school or play together. Your lives and futures are intertwined.

That is why all you have with unions is your integrity—your word. You can fight about issues, and you will. But your fighting will be more productive if you are always clear about what issues are negotiable and which are untouchable. During negotiations, waffle only on those matters you identified as negotiable and nothing else. Otherwise, your word will be meaningless and your relationship will be without trust.

Now to the negotiating table. Make every effort not to have your first date there. A war zone is no place to get acquainted.

Almost every time I traveled to the businesses with Bill Conaty, we met with local union representatives. These sessions were mainly to get to know one another better and lay out positions without any immediate agenda. Everyone would get a chance to talk, and even better, in these settings, we were all more inclined to listen. Bill and I always learned a lot, and it served Bill and the company well in every national negotiation.

Let’s look at another charged relationship to manage: with stars.
One thing is certain. You need stars to win, and I have always advocated identifying your stars—that top 20 percent—and stroking and rewarding them in an outsize way.

But stroking can backfire. A star’s ego can be a dangerous thing.

I’ve seen talented young people promoted too quickly and their ambition spin out of control. I’ve seen terrific financial analysts, engineers, and network executives get told one too many times that they are irreplaceable, and they start swaggering around to the point that their teams resent them. I’ve seen smart, capable individuals come to believe they are so indispensable that they should not be bound by anything, including the company’s values.
*

Stars can become monsters if you let them.

That’s why someone has to be on the lookout, namely the star’s boss, with support from HR, if you have it. This job cannot fall through the cracks. The minute a star seems to be getting arrogant or out of control, someone has to call the person in to have a candid conversation about values and behaviors. You can never be afraid of your stars; they can’t hold a company hostage.

Now, sometimes stars surprise you and up and leave. That can be a defining moment. Ideally, the star will be replaced within eight hours. That’s right, eight hours. This immediate reaction sends the message to the organization that no one is indispensable. It shouts out that no single individual is bigger than the company.

One morning in the summer of 2001, just as Jeff Immelt was about to take over as CEO, Larry Johnston, who was CEO of our appliances business, came to headquarters to tell us he was taking the job as CEO of Albertsons, the large West Coast food and drug chain. Larry was a big presence in GE, with a strong track record and great reputation. Even though the announcement of his departure knocked the wind out of us, we moved quickly. By four o’clock that afternoon, we appointed Jim Campbell, the sales manager in Appliances, to the job. Albertsons got a great CEO, and we never missed a beat. Jim was off and running from day one.
*

The only way to be able to replace a star swiftly is to have a slate of people ready to do so. That’s where good evaluation systems come in, in particular, career development planning. That process can surface one or two in-house candidates to replace any star who departs.

Just don’t wait until the star leaves to start the replacement process. By then it’s too late to make the point.

A third complicated relationship is with what I call sliders.
These are employees who were once good performers but have hit a wall for some reason or another, ranging from a midlife crisis to a job-related disappointment.

A slider, while generally well liked, now just shows up at work and goes through the motions. In most cases, no one knows what to do about it. In fact, the situation is usually so awkward, people look away.

You can’t. Sliders need to be reenergized, either with new jobs or training. Otherwise, they fossilize in their jobs, and they often grow bitter, slowly but surely infecting their groups with disaffection. Often, managers take a long time to let these individuals go because their previous accomplishments were more than acceptable. But a company that manages people well quickly moves to get its sliders back in the game, and if that doesn’t work, tells them the game is over.

The final relationship that cannot be ignored is with disrupters.
These are the individuals who cause trouble for sport—inciting opposition to management for a variety of reasons, most of them petty.

Usually these people have good performance—that’s their cover—and so they are endured or appeased.

A company that manages people well takes disrupters head-on. First they give them very tough evaluations, naming their bad behavior and demanding it change. Usually it won’t. Disrupters are a personality type. If that’s the case, get them out of the way of people trying to do their jobs. They’re poison.

As practice 4 would suggest, managers end up spending the vast majority of their people-management energy on charged relationships—too often trying to salvage sliders or disrupters. That’s natural, but it’s a mistake.

Most work in an organization gets done by the people in the middle 70, those solid performers who don’t quite shine but work hard and well, and perhaps could shine with enough care and attention. You just can’t allow the middle 70 to toil away in a form of obscurity, like a well-behaved, mild-mannered middle child in a family of attention-grabbing prodigies and troublemakers.

Well-managed companies fight that pull. In fact, they make sure managers spend at least 50 percent of their people time on their biggest constituency, evaluating and coaching them. Further, they don’t forget the middle 70 when it comes to rewards, recognition, and training.

One important note. In larger companies, the middle 70 can be a highly differentiated group. In a way, it has its own top 20, valuable middle, and bottom 10 percent. You need to recognize those performance variations—you can be sure the employees do. In fact, a common and damaging dynamic is the departure of the best performers in the middle 70. Some of these individuals are almost stars—their performance is that close. But when they get lumped with the middle 70 and are not managed attentively, they leave in frustration for a company where they will be more appreciated. That’s a real loss.

Future stars are very often hard at work—quietly—in the middle 70. A good company recognizes that and makes it clear that this ranking is just a snapshot in time. It encourages this group, using every tool in its people management kit.

The point is: The middle 70 matters a lot. It is the heart and soul—the central core—of any company.

If you’re going to manage people well, you simply cannot forget the majority of them.