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Mediocrity Invited: how to encourage high performers

In most of our companies we have a big sign with bold letters over the main door into our building. It has been there a long time and is such a regular part of the fixtures that we have lost sight of it. Although we diligently practice what the sign says, few of us, if any, notice it as we walk in and out of the building each day. We probably can’t even remember what it says, so let me remind you: “Mediocrity Invited.”

We do many things to ensure that mediocre employees feel totally safe and secure and are not made uncomfortable. This month’s article illustrates examples of things we do to ensure that we stay true to our promise on the front door.

Accountability is uncomfortable, so ignore it.

Most companies have difficulty creating a culture of holding people accountable. When somebody has not done an action item from the previous meeting, we merely note it and move on. Holding that individual accountable on the spot is uncomfortable – both for ourselves and for the delinquent. So, instead, we don’t hold him or her accountable. By the way, who in your company would prefer that you hold people accountable? Clearly, those who are accountable. Who would not prefer it? Of course, those who are not accountable. Oh yes, I forgot the signage on the front door: Mediocrity invited. We wouldn’t want to make the unaccountable uncomfortable, would we?

Put off performance management a little longer.

Most managers who have let go of an employee will confess, when asked, that they waited too long to take action. At the same time, they acknowledge that the peers of the non-performing employee had noticed the lack of performance long before the manager even became aware of it, much less took action on it. So, the performing employees, who picked up the slack of the non-performing, have been waiting patiently for management to take action. Let’s ask ourselves who in your company would like management to take quick action on non-performing employees? Of course, all the performing ones. Who would prefer that you be cautious, deliberate and slow in taking action? I suppose the non-performing ones. Oh yes, the signage on the front door!

Don’t celebrate one person if it’s going to ruffle others.

We all like to recognize employees for good deeds done, particularly deeds that are beyond the call of duty. We want to acknowledge them publicly, but fear its impact on somebody left out. The fear of giving recognition is the fear of upsetting those unrecognized. So, we include a few more people in the recognition.

The other day one of the senior managers came back from a great industry gathering where our advertising work was featured prominently and received a lot of accolades. True to our culture of celebrating success he sent out a company-wide email sharing the joy and recognizing a half a dozen people. Just in case he had missed a few others who might have contributed, he added a caveat that he was rushed in sending the email and promised to send another with any names he may have missed. And yet, I suspect that there were probably one or two individuals who really stood out in making that advertising campaign a success. Would we be comfortable pointing out just one person? Instead, have we not diluted that recognition by including all?

In many companies where management recognizes individuals at their monthly all-hands meetings, executives work hard to ensure that everybody gets a turn to be recognized. They don’t want one name called out too often, and many names never called out at all. Who would prefer this approach? The people who otherwise would not be recognized. Oh I forgot, the signage on the front door.

Pay over-performers and under-performers the same salary.

Recently, the Director of HR in our company sent a memo to the executive team asking for input on the annual salary review process that we will undertake in a few months. Compensation has been a frequent topic in these Food for Thought articles. Although most companies espouse “pay for performance” they practice “pay for pulse.”

If you truly believe in paying for performance, ask yourself this: Does the spread of salaries among comparable employees resemble anything close to the spread of their individual performances?
Most managers will concede that a highly performing employee contributes manyfold the amount that a poorly performing employee does. Yet, is the star performer rewarded with pay that is a manyfold multiple of the poor performer? It is tough to spread the salaries of poor- and high-performing employees through meager annual salary increases. So, how can we spread the salaries to reflect their relative performance? I offer a collection of ideas, though admittedly most of them are bizarre, and end with the only practical idea that I have actually used.

Option 1: Guarantee a raise or resignation

What would happen if you announce to your employees that you are abandoning the practice of annual salary reviews and corresponding salary adjustments? From here on you will practice a flat salary model unless the employee requests a salary review. Tell your employees: “If you want a salary increase, just come and ask. All you have to do is ask! Come on over, anytime. All I require is that you bring your resignation with you. I will guarantee one of the two. Just come and ask. Come anytime. Come often!”

What kind of employees in your company would like this approach? The high performing, confident ones. Who would fear this approach? The non-performing employees lacking in confidence. So, why won’t we do this? Oh yes, the signage on the front door.

Option 2: Take from poor performers to reward high performers

Annual salary increases usually average a small percentage increase, say 3 or 4 percent, reflecting movement in the market and the company’s financial appetite. That small a number leaves little room to really recognize the high performer with a distinctly higher salary.

That leads us to our next bizarre idea. What if you had all employees, upon employment, sign an understanding that the offered salary is for the remainder of the calendar year? At the beginning of each year every employee’s salary will be automatically reduced by 10 percent. Furthermore, indicate in the agreement that you commit to contribute the 10% savings from the entire payroll to the pool of money available for annual salary increases. So now each year an employee’s average salary increase can be 13 or 14 percent! Of course, you intend to reach that average by distributing much larger percentages to the high performers and very low percentages to the poor performers. Again, who would like or dislike this idea? Yet alas the signage.

Option 3: No increases below 5%

Finally to something more practical, and something at least tried out by me. When management conducts salary reviews and plans out annual salary increases for each employee, they are always cognizant of the total payroll impact. It’s usually measured in terms of the (weighted) average of all of the salary increases given to the entire workforce. Seldom, if ever, does management examine the standard deviation of that distribution. Would you prefer a high standard deviation or a low figure? A high figure indicates a wide spread in the increases – some employees (hopefully performing ones) receiving large increases and others (hopefully, non-performing ones) receiving low increases. You would want a high spread.

How do you get a high standard deviation, yet keep the mean at the, say, 3.7 percent you have budgeted? Well you have to give a lot of zero increases to afford a 15 percent increase for your star performers. How can you force that? A practical idea: Require your management to achieve the 3.7 percent average with the caveat that nobody can be granted an increase between the amounts of 0 and 5 percent. So, all the increases have to be either 0 or 5 percent and above. Yet, the average must compute to 3.7 percent. You will get your desired result. Tempting as it is, I will not ask the question of who would like this approach and remind you of the sign. And so I did.

Next time you enter the front door of your building, take a look at that sign. How long has it been up there? Who takes note of it? How institutional has practicing the words on the sign become? If you want to change the signage and are wondering what to put up instead, here is a suggestion: Put up a real sign over the door that reads, “The sign that used to hang here has been intentionally removed.” Cause your employees to come and ask you what the new signage means. You will intentionally cause a conversation.

We welcome your comments on our Food for Thought mailings and encourage you to explore the Food for Thought archive. We hope your business is doing well. We’re happy to chat about the content in this article or anything else with which you’d like assistance.

Food for Thought is our way of sharing interesting concepts on corporate leadership and management with others who might find it useful. The thoughts offered are intended to be controversial and thought-provoking. They are intended to help our readers intentionally realize their potential, what we call >Potentionality.

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