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Jeffrey Pepper - Professor at Stanford University and columnist for Business 2.0 - has a great article in the current issue of business 2.0 entitled: “The Myth of the Disposable Worker” (here - may require subscription)

He posits that companies that forcefully rank their people to get rid of those near the bottom are doing something akin to running a factory that produces lots of defective widgets and announcing the solution as “(We) have created a high-performance manufacturing system by throwing imperfect items in the trash.” - it’s just ridiculous!

I especially love this quote - talking about an incident when the dean at the Stanford Business School complained that he did not give enough low grades -

“When he asked why the grades in the class were, on average, higher than those awarded by my peers, I replied (only partly in jest), “Maybe I’m a better teacher.””

But that’s what it is all about - isn’t it? Sure, you will always end up with better and poorer performers (and some real duds) - but you got to remember that as you grow, the profile of your employee pool will start reflecting the profile of the population as a whole around you. And it’s what you do with that talent that will set you apart from the competitors. Sure there are star companies that can attract and hire superior talent, but for most companies - thinking that you will outdo the averages is like thinking you will succeed in timing the stock market - it just won’t happen that often.

Why cannot most companies unleash the passion that can be found in open source projects, web 2.0 type companies and other environments? Is it because we have organizational structures and procedures that choke all communications up and down the chain and in between organizational silos? Or is it because we measure people on goals that are too granular for them to get excited or passionate (i.e., measuring a marketing person on click-through rates only instead of on their ability to impact the quantity and quality and cost of new customer acquisition)? Or is it because we allow cultures to flourish that cause people to behave differently than they do in the outside world? Or are we just bad teachers?

And don’t forget, like Jeffrey says in his article - high turnover is expensive:

“First you have to give out severance pay, and then you have to find and hire replacements, invest in their training, and suffer shortfalls in customer service and productivity until the new people get up to speed. Since you are probably going back to the same labor pool to hire again, odds are you’ll fire a lot of your replacements too. That’s because relative turnover rates tend to stay constant — low-turnover organizations that know how to hire and develop talent keep doing so effectively, while high-turnover organizations continue to churn through bodies.”

Bad business…

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