4 ms·

Not that it applies to you, but in my experience, small companies with a single owner or a small group of founders are sometimes the very worst in regards to po

by p4wnc6 10y ago

Not that it applies to you, but in my experience, small companies with a single owner or a small group of founders are sometimes the very worst in regards to politics. They will always say (and may even believe) they are doing things out of a pragmatic interest in the business's success, and often will definitely say something like "at my company we don't have politics issues" ... but it's just not true. Either they are openly duplicitous and only say those things because they believe it creates an outward message of stability that positively affects workers (generally it doesn't), or they really believe that whatever their particular actions are, they are not motivated by politics even when in truth they are overwhelmingly motivated by politics. If owners enter 'dictator mode' it can be very hard to separate out what is cognitive dissonance vs. what is a genuine attempt to manage a business without politics. As far as your question goes, I think it begins with a fundamentally different outlook. You write about it in terms of who to promote / keep / fire as if that is the right menu of options to orient your thoughts around. Instead, I'd say you should think more about how best to develop the workers you have. Firing people ought to be a distant thought that is only brought up under serious conditions, like overt misconduct, extreme underperformance over time or incompetence (that can't be corrected with training and investment). You strike me as someone who is not thinking in terms of employees as investments that payoff over time, but rather you are using some kind of hyperbolic discount function that only looks at some short window of recent productivity or some short forward-looking window of possible future productivity -- classic short-term thinking that leads to a lot of bad outcomes. If you just want some kind of cookbook style management process, you can find books endorsed by millionaires, billionaires, political leaders, athletes, coaches, etc. etc. and just pick whichever one tickles your personal confirmation bias fancy. (I'm not speaking just to you specifically, we all do this, certainly me included). So you can always justify pretty much anything you choose by saying, "isn't this how other people do it?" or "Wealthy Person X said to do it like this..." -- it doesn't actually mean you're making the right choice for your business. The other thing is that you conceive of your employees as falling on a linear ranking, which I feel is misguided. I think it is not possible to put a useful ordering on employees like that, because they are individuals and you can't discount their potential, drives, passions, personal circumstances, etc., all of which are changing often. There are all kinds of dimensions in which a person can be good or bad in their job for you, and there is almost surely no coherent "norm" you can define on that high-dimensional space that adequately orders employees ... and certainly not something entirely subjective like "who do I happen to think is most productive modulo special circumstances". Even if Person A is "more productive" than Person B, you don't know that will always be true. Maybe Person B is a faster learner, a more creative thinker, or has other latent talents that you have not properly tapped into yet. What you propose almost sounds like a proto form of stack ranking [0], which is a notoriously horrible way of doing things. But at least with stack ranking, you tended to receive scores from multiple people who function in mostly uncorrelated ways in the firm, so as to (mostly) remove dictator effects or sabotage effects. I don't think you could easily get that in a very small company where everyone knows everyone else and where the founder/owner is highly visible in day-to-day actions. Overall, I'd just generally recommend a totally different mindset. Stop trying to apportion wage to micro measurements of productivity. Just admit you (and everyone else) can't measure productivity well enough for that to be accurate and robust to social biases. Don't conceive of your lowest performers as candidates for termination. Rather, spend lots of time first seeing them as examples where your management style, workplace offerings, equip/tools/etc., have not been good enough to coax good performance out of them, and invest in them. View their payoff as something that happens over time, yes still with some discount rate more like bond pricing, but not so extreme that their short-term productivity counts for so much that it could lead to them being fired. If their productivity is low for a long time, after you have implemented many strategies for helping them improve, then you can be more confident that you're making a fair and correct decision to let them go. [0] < https://en.wikipedia.org/wiki/Vitality_curve https://en.wikipedia.org/wiki/Vitality_curve >

joelx 10y ago
I really enjoyed reading your very thoughtful response. I understand that you are making a recommendation that instead of using some form of stack ranking of employees that I should instead look to keep every single person until I am 100% sure that it is a fair decision to let them go? I am not sure that what you recommend would work for the type of business I have. Perhaps it makes sense for a product based business where you can invest in someone for a year because they may create a revolutionary change to your product after that. My business is a service business - we operate on very tight margins. I like everyone I hire and generally wish I could keep all of them. I don't have that luxury. I am forced by the economics of my industry to let people go... so I have to pick using some method. Stack ranking based on productivity seems to be the most fair way to do it. Is there a better method than stank ranking for selecting who to let go?
- p4wnc6 10y ago
  There seem to continue to be some fallacious ways of thinking in your reply. It is very common for people to always think that more humanity-affirming ways will apply to "someone else" but never to them. I have actually heard people claim exactly the opposite of what you have said -- that non-stack-ranking may work in a service business, but not a product business! The grass is always greener I guess. The brass tacks economics always matter, of course. Your situation suggests to me that you have over-hired, or hired incorrectly. Rather than creating a company culture whereby people are pruned, it would create a better workplace to simply not hire too many people to begin with. Operate in a leaner fashion, even scaling back revenue opportunities and saying "no" to new business when you have to, so as to disallow the company to grow in unsustainable ways that then lead to a hard requirement for layoffs. This won't be possible 100% of the time, but going for a stack ranking approach instead is like you are just giving up on intelligent, sustainable growth and instead saying you will grow randomly and unsustainably, and then simply fire people when you have to pare back. There is also the question of how much of a financial cushion you leave yourself. Instead of being "forced by the economics of [your] industry to let people go" you should use your knowledge of those industry economics to build a safety cushion that allows you to continue supporting everyone's payroll through the lean times. Yes, sometimes the lean times go on so long that you can't do this indefinitely, but the more you budget for it, the better. Basically, I do not see anything about your situation that makes it special in these regards. I've worked in statistics consulting firms before, where the work is highly variable and where the business really needs a high level of productivity from everyone. Even in that situation, the company was able to avoid layoffs by planning ahead, hiring conservatively and hiring for versatile workers with broad skill sets, and budgeting for safety payroll cushion to express the company's value that avoiding layoffs until the absolute last minute (and communicating very transparently about it all the time) was deeply important. If you read more from the Wiki article that I linked, you'll also see some of Deming's well-known criticisms of stack ranking -- and Deming was a well-known productivity expert [0] who helped many Japanese firms gain international reputations for efficiency and quality (firms that faced tough brass tack market economics just like you do, but without resorting to stack ranking). Many of the negative sides of stack ranking could have deleterious effects on your business even during times when you do not need to fire anyone. It is known to affect morale and productivity very badly. It is known to be highly susceptible to office politics and cronyism, especially when times are tough and employees scramble to secure their position. This in turn often leads to a combative and overtly zero-sum / competitive workplace, which is well-known to be bad for productivity (I imagine especially in a service business). At any rate, it seems like the specifics of your situation which you are using to justify stack ranking don't actually indicate that stack ranking would be useful or productive for you, and in fact suggest that it might even be counter-productive. The best recommendation I can give is for you to deeply question and re-evaluate some of the assumptions you seem to be working on (for example, that there's no way to address both the market economic constraints on your business and also the need for company values which preclude frequent layoffs and promote longer-term investment in employees). Without re-thinking some of these assumptions, I think it's doubtful that any method of determining who to layoff is going to be constructive for you. [0] < https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly_Diseases https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly... >

by p4wnc6 10y ago

joelx 10y ago

I really enjoyed reading your very thoughtful response. I understand that you are making a recommendation that instead of using some form of stack ranking of employees that I should instead look to keep every single person until I am 100% sure that it is a fair decision to let them go? I am not sure that what you recommend would work for the type of business I have. Perhaps it makes sense for a product based business where you can invest in someone for a year because they may create a revolutionary change to your product after that. My business is a service business - we operate on very tight margins. I like everyone I hire and generally wish I could keep all of them. I don't have that luxury. I am forced by the economics of my industry to let people go... so I have to pick using some method. Stack ranking based on productivity seems to be the most fair way to do it. Is there a better method than stank ranking for selecting who to let go?

p4wnc6 10y ago
There seem to continue to be some fallacious ways of thinking in your reply. It is very common for people to always think that more humanity-affirming ways will apply to "someone else" but never to them. I have actually heard people claim exactly the opposite of what you have said -- that non-stack-ranking may work in a service business, but not a product business! The grass is always greener I guess. The brass tacks economics always matter, of course. Your situation suggests to me that you have over-hired, or hired incorrectly. Rather than creating a company culture whereby people are pruned, it would create a better workplace to simply not hire too many people to begin with. Operate in a leaner fashion, even scaling back revenue opportunities and saying "no" to new business when you have to, so as to disallow the company to grow in unsustainable ways that then lead to a hard requirement for layoffs. This won't be possible 100% of the time, but going for a stack ranking approach instead is like you are just giving up on intelligent, sustainable growth and instead saying you will grow randomly and unsustainably, and then simply fire people when you have to pare back. There is also the question of how much of a financial cushion you leave yourself. Instead of being "forced by the economics of [your] industry to let people go" you should use your knowledge of those industry economics to build a safety cushion that allows you to continue supporting everyone's payroll through the lean times. Yes, sometimes the lean times go on so long that you can't do this indefinitely, but the more you budget for it, the better. Basically, I do not see anything about your situation that makes it special in these regards. I've worked in statistics consulting firms before, where the work is highly variable and where the business really needs a high level of productivity from everyone. Even in that situation, the company was able to avoid layoffs by planning ahead, hiring conservatively and hiring for versatile workers with broad skill sets, and budgeting for safety payroll cushion to express the company's value that avoiding layoffs until the absolute last minute (and communicating very transparently about it all the time) was deeply important. If you read more from the Wiki article that I linked, you'll also see some of Deming's well-known criticisms of stack ranking -- and Deming was a well-known productivity expert [0] who helped many Japanese firms gain international reputations for efficiency and quality (firms that faced tough brass tack market economics just like you do, but without resorting to stack ranking). Many of the negative sides of stack ranking could have deleterious effects on your business even during times when you do not need to fire anyone. It is known to affect morale and productivity very badly. It is known to be highly susceptible to office politics and cronyism, especially when times are tough and employees scramble to secure their position. This in turn often leads to a combative and overtly zero-sum / competitive workplace, which is well-known to be bad for productivity (I imagine especially in a service business). At any rate, it seems like the specifics of your situation which you are using to justify stack ranking don't actually indicate that stack ranking would be useful or productive for you, and in fact suggest that it might even be counter-productive. The best recommendation I can give is for you to deeply question and re-evaluate some of the assumptions you seem to be working on (for example, that there's no way to address both the market economic constraints on your business and also the need for company values which preclude frequent layoffs and promote longer-term investment in employees). Without re-thinking some of these assumptions, I think it's doubtful that any method of determining who to layoff is going to be constructive for you. [0] < https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly_Diseases https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly... >