Organizations need people who know what they’re doing, where they’re going, and have the skills to get there. We call that “talent.”
Unfortunately, there’s a common misbelief that the best way to get talent is to buy it – not build it – by ranking everyone, eliminating those at the bottom and hiring new people to replace them.
This approach was first popularized in the 1980’s by Jack Welch at GE and was reinforced in 2001 by Jim Collins who told us to “get the right people on the bus and the wrong people off.”
By 2012, 60% of Fortune 500 firms were using some type of ranking system – with dubious results. Vanity Fair contributing editor Kurt Eichenwald blamed Microsoft’s stack ranking system for a “lost decade and a cannibalistic culture.” He interviewed a number of current and former Microsoft employees who all cited stack ranking as the most destructive process in the company. Even though Microsoft finally abandoned this practice in 2013, it remains alive and well in many companies.
This practice leads people to focus on self-promoting instead of on development, and those identified at the bottom level are often high performers who simply did not spend enough time playing politics.
Treating people like replaceable commodities is not only disrespectful and demoralizing, but waiting for them to fail and then weeding them out does not make good business sense.
The best way to infuse your organization with talent is to develop it.
Yes, it’s good to regularly bring in some new people with fresh perspectives to ensure the organization does not become stale. But if your organization is dedicated to developing internal talent, everyone benefits.
- It’s less costly to develop talent internally than it is to recruit and onboard new people effectively.
- Developing talent internally is less risky than bringing in unknown, unproven outsiders because you already know there’s a culture fit.
- Morale is higher when people know they have an opportunity to learn and grow.
- Creativity, innovation, and the ability to adapt to change increases.
Take a serious look at the potential talent you are likely missing.
What if you believed everyone has the potential to be a winner, and it’s your job as a manager to develop winners?
What should you do with the bus? Park it (permanently) and get everyone off. Do you really want an organization full of passengers?
Enable people to drive their own vehicles by focusing on development and ensuring the vision is clear and shared.
Forget that clunky, gas-guzzling bus. Doesn’t a fast, nimble fleet of vehicles headed in the same direction make more sense?
Indeed, introverts and those who are adverse to politics do not do well in companies with these practices unless they are spotted by someone who is willing to champion them, and unfortunately, there are no guarantees that will happen. I read your article with interest. It’s very well written, makes a strong case for development and offers excellent advice on how to take action. The model you suggest is compatible with the situational leadership model that I will be describing in my next post. Thanks for enriching the conversation.
I like this Jesse, and have always had an issue with people looking after their careers instead of looking after the business. I have never got the cause, even though I understood the motivation, but this makes perfect sense to me now.
The unintended consequence of how we sift out top and bottom performers can only result in self preservation and therefore people being more obsessed with not taking a risk that could be a career limiting move. This is a massive opportunity cost for the business to thrive in my opinion and needs serious shift in thinking and action to unwind.
“This practice leads people to focus on self-promoting instead of on development, and those identified at the bottom level are often high performers who simply did not spend enough time playing politics.” That just nailed it for me.
Hi Thabo, Yes, quite often the system itself is what causes people to act in ways that don’t make sense and actually are not good for themselves or the business. If you didn’t see it earlier, you might enjoy my post on structural integrity that describes the different systems and processes that if not aligned, will derail even well-intentioned people.” These are indeed unintended consequences and, as you said so well, “a massive opportunity cost.”
Really? You are challenging the great work by Jim Collins and his team? Jim’s book is not theory (like what you are pushing) it was a study of the most successful companies in history. The idea of getting the right people on the bus is correct and still stands today. Jim never mentions ranking people. He talks about getting the best people and developing them.
You are certainly brave to challenge “the bus principal” but I suspect you are doing it to provoke discussion.
Thanks, Phil. I’m glad you raised this. One of the consequences of Collins’ research, whether it was his intention or not, is that it has been used by many to support the “rank and yank” approach. The bus metaphor is a different issue. In my opinion, they selected the wrong metaphor. A bus implies one driver and the rest of the team sitting passively on seats. There is much to be learned from Collins’ findings. But if we reify it, we won’t have the opportunity to shed light on the cracks and to continue learning and growing.
Jesse is correct. You understand that part of the success of Collin’s strategies are how vague and generalized they are. If you don’t believe it, use his Get the Right people on the bus, Get those people in the right seats, and Get the Wrong People off the Bus principal since you brought it to the forefront of his defense. Is that open to interpretation? Absolutely it is! Do you think a manager in Deloitte and a manager at Home Depot would interpret that principal the same way. Nick Saban (ALABAMA FOOTBALL HEAD COACH) is a Collins disciple as well but he hardly starts cutting kids from the rosters. That Deloitte manager I mentioned knows they already have some of the best talent in the industry so his strategy with regards to the “wrong” people would be to get the folks in the right areas of the company. Accountants get stuck in manufacturing jobs as organizational changes take place and believe it or not, they are not likely to shine until you put them somewhere within the company where they can use their natural skill sets. The Home Depot manager has a broad spectrum of talent ranging from unskilled and young labor to talented proven leaders from other industries. He may interpret getting the wrong people off the bus as we only hire folks with 2 years of college but at the end of the day he has to cost justify the decision to pay $20/hour to those folks to stock shelves vs. paying $12/hour to someone without an associates degree. Collins would not even venture out on a limb and say whether Jack Welch, former GE CEO, was a LEVEL 5 manager because if he narrows it down too much there is liability in doing so.
Upper level management in companies like to pick and choose principals and then run with them. You run a great risk when you start pulling up one set of principals and counting on them to fix your organization. Jim studied the most successful companies but the principles he penned are not earth shattering or specific. If I say, I’ve been looking at our competition and can tell you that just from a physical standpoint if every player on the team commits to being able to bench a minimum of 225 pounds 3 sets of 10, squat 380 pounds 3 sets of 12 using proper form, run 40 sets of our stadium bleachers without pause, and run a 7 minute mile within 90 minutes 4 times a week we’ll be able to physically beat all the other teams in this league and we do just that and win I’m a pundit to be listened too. If I had those same goals in mind but just tell others if we get the team into shape we’ll have a great season I’m not a great prophet or leader as I really put nothing out there to measure against. If I fail, I have no fear you’ll dig into what I did too much because my strategy was so general as to be generic. That’s accidental excellence. Stop rewarding mediocrity with promotions to “get” those folks into the right places of an organization and you’ll inspire the hidden talent within your company without an oracle like Jim Collins.
Well said. Thank you for taking the time to illuminate these points, Austin.
Jesse Lyn, right on target. Growing employees is, in my estimation, at the heart of leadership. As to ranked or forced distribution rating systems, the research was in many decades ago. They tend to result in backstabbing and unpleasant competition. Another case where those of us on the academic side did not convey what the research studies were telling us.
Hi John, I love your comment: “Growing employees is the heart of leadership.” I had fun extending the metaphor -vision as the head of leadership (or perhaps the eyes), supporting (or growing) people as the heart, and the hands and legs as taking action. I also appreciated your comment on research and academics. Thanks for deepening the conversation John.
Great post Jesse – and very well put. The leadership conversation that we require today is a radically different one.
One of the examples is bell curve and fitting people into it. An established principle that companies like Microsoft are now doing away with. The assumption that only a few people can be top performers is flawed. It undermines those who are either introverts (as you mentioned in the post) or those averse to politics.
In my view, organizations do not have a choice of NOT developing their people.
I loved the analogy of parking the bus and getting everyone off it 🙂
You’ve named the underlying problem, Tanmay – the bell curve – an artificial construct based on the idea that there are a small number of high performers (about 10%), a small number of low performers (about 10%) and everyone else is average (about 80%). But actually research going as far back as the 1960’s challenges this idea. In truth, you get what you expect. And it has been demonstrated time and time again that when you expect people to be winners, they rise to the occasion.
Great to see you here, Tanmay. Thanks so much for adding this dimension to the conversation.
I have always asked the participant in my leadership classes, “If the bus breaks down, will your people get out and help fix it together so it runs well again? Commitment and inspiration is as important as achievement.These are generally not factored into ranking systems. And in my experience, the leadership skills needed to ensure this aren’t prioritized in companies with ranking systems (or whatever words they use to call their ranking/calibration system because they know ranking is bad but they do it anyway). Frankly, conversations around performance management systems never seem to be positive wherever I go. I agree with you. It’s time to get rid of the bus. Maybe a fabulous new spaceship going to amazing places instead?
Hi Marcia, Love your question “who’s going to fix the bus when it breaks down?” Thanks for raising the issue that rarely are leaders given points for generating commitment on their team or for developing their team. No matter what factors are supposed in a ranking system, it’s not possible to create one that is objectively accurate. I have seen too many talented individuals become actively disengaged because they were ranked low when they were actually performing at a high level. The effectiveness of a performance management system depends on it’s purpose. It doesn’t work well when the purpose is to sort people. But if the purpose is to open the door for development conversations, it can be quite helpful. A spaceship going to amazing places implies vision, sounds like fun!
Thanks Jess for this great post,
I always had a problem with Jim collin’s idea of getting wrong people out of the bus.
Unless these people did not share same values, companies should devellop them, we go to War with the soldiers we have, not with earned one.
Well said!- the defining factor should be values alignment. Skills can be developed.
Thanks for making this important point, Hictoy.
Jesse, it likely comes as no surprise that I completely agree with this wonderful post! When I hear of yet another company that has decided to stack rank their employees, I admit to a powerful (negative) visceral feeling; it’s never been something that seemed to make sense, even when I was an employee in a large multinational company that used such tactics.
When I hear of a company that has taken the route of developing their employees, I cheer! It’s not necessarily the easy or inexpensive way out, but it just makes good sense. We need more “good sense” in our organizations!
Thanks for your insightful comments, Mary Jo. I understand your visceral feeling – it’s hard not to care when you see employees as human beings rather than high or low “performers.” Investing in development might not be the easy or inexpensive way in the short term, but it is in the long term when you consider the cost of not tapping into the full potential of your workforce.
I believe metaphors are great teachers–and also must change with the times. In old leadership circles, football was the reference. One quarterback calling the plays and everybody stays in their position. Today, soccer is closer to reality where everyone on the team handles the ball and makes decisions.
I called Jim Collins when his book first came out, I suggested that he also missed an important criteria on “great:– the nature of the product or service delivered and its impact on consumers and communities. In my mind, Phillip Morris would never be called great. There is no redeeming value in cigarettes.
He said he’d take it into consideration.
One of his “great” companies was Circuit City–now only a distant memory. Perhaps if Circuit City had employees who were more than passengers, they might have been nimble enough to see trends and survive.
Lastly, we are still seeing organizations use a bell curve to rank employees,forcing managers to create a restrictive number of excellent employees. Makes me gag!
I have always loved Ken Blanchard’s approach in developing everyone to be A players and developing their unique skills.
Bust the bus?? You bet!
Thanks for sharing your conversation with Jim Collins. Worthwhile purpose is an excellent criteria. Thanks also for your examples that demonstrate why our metaphors and lessons need to be revisited in the context of current times, like the once “great” and now extinct, Circuit City. Reading your comments, I found myself going yes, yes, yes. Thanks so much for sharing your wisdom with us, Eileen.
KaPow! Powerful, articulate, and on point.
I’ve learned a lot from Jack. He still defends the 70/20/10 approach where the bottom 10% are either managed out, self-select out, or get fired.
It should be noted, that Welch is a huge proponent of developing talented people.
I think we’ll all agree that perennial poor performers either need to be reassigned, retrained, or managed out. However, stacked ranking isn’t necessary when it comes to managing poor performance.
Thanks for weighing in, Dan. There is much that can be learned from Jack Welch. The reason eliminating the bottom 10% worked at GE was that it was just a part of a comprehensive approach to culture change. Over time it no longer made sense and was discontinued.
What an interesting post, Jesse! Here in Bend we have Pubcycles, where a group of people all pedal like mad to make their vehicle go, one person steers, and everyone has a great time contributing to “the cause.” I’m not sure I would go with a fleet of individual vehicles, to further the analogy, because we are all connected, working in the same arena, and we need that connection to develop each other’s abilities.
I believe I have been stack ranked in the past, but we have a Chief now who has reassigned me to a position where I can develop my skills and contribute at a higher level. Although the process of moving was difficult at first, I now understand what he had in mind, and it turns out to be a better deal for all of us (including the community).
I also believe that determining and publicizing an organization’s core values and credo goes a long way toward defining your workforce, so everyone on the Pubcycle will get along and share strong values. (Does this make any sense?)
Love your description of the pubcycle, Dave. It’s a wonderful metaphor, especially the way you describe it.
Your comments all make great sense. Thanks so much for sharing them here!
Lovely post, Jesse. Completely agree that the bell curve creates challenges when it comes to recognizing the right people. So, here is my practical experience when it comes to working with people.
1. An organization has to have the right definition of success that promotes the recognition of individual talent as well as contribution to the organization (something we tend to call collaboration). Too many organizations focus on individual achievements only which leads to people focusing more on their personal careers
2. People get stack ranked at the bottom for several reasons
– they are introverts and unable to play politics (as you rightly mentioned)
– they do not “align” with the powers that be and are more focused on doing what is right
– they are simply in the wrong role
Lots of times in large organizations, we find that people are all assumed to be good at one thing. That is not necessarily true. One person could be good at numbers, another at data, a third at business development, a fourth at delivery and so on. Taking a person who is a whiz with numbers and putting him/her in a delivery job is bad for the person as well as the organization.
In large service organizations, there is a definite necessity to recognize people based on their contributions to the organization. The people who have been placed in roles based on their strengths should definitely be recognized on the basis of their contributions. Where it has not been done, I have seen freeloaders get away with a lot of benefit compared to talented folk who have slogged it out. In such cases, talented people have left thereby causing grief to the company.
To summarize, I believe organizational design and a strong positive culture will help create a company where people will be recognized for their talent and hard work. But I do maintain that rewarding people for the extent of their contribution is a necessity in any organization.
Thank you for writing such a thought provoking post!
You make a lot of excellent points, Sudhir. I especially appreciate your raising the question about how success is defined. Too many organizations reward only results, without paying attention to how the results are obtained. Organizations that promote leaders with what I call “bad behavior” pay a huge price in the long-term. They lose good people, and those who stay are minimally engaged and rightfully unwilling to take risks.
Getting people into the right role is so important. It’s true that sometimes it’s a huge learning curve, if not impossible, for someone to be placed in a role that is not suited to them. When people are involved in making decisions about their role, instead of having a new role assigned to them, there is a greater likelihood for success. Thanks so much for taking the time to share your thoughts and deepen the conversation!
Thanks for your thoughtful comments, Jesse. I completely agree!
The point that you raised about promoting leaders with “bad behavior” is especially a huge mistake. I have seen it happen with disastrous results in the future to the individual as well as to the organization. But then such decisions are taken with short term personal benefits in mind, specifically to get away from facing a situation head-on.