If you’re a CEO, small business owner or entrepreneur, you operate in a different world than most others. You get up every morning fighting the good fight to make sure your business succeeds. If it fails, there is no mattress to fall back on which is why you may constantly remind yourself, even in the most turbulent times, that failure is not an option. No matter what industry you’re in, you face more and more competition, technology continues to change the way consumers interact with brands, and sales is the lifeblood that needs to keep flowing in order to keep your business going. Most importantly, you need the best employees you can find to acquire new customer relationships, build great products, lead in innovation and service your customers until they fall in love with your brand.
So how do you do all this? It starts with hiring the best people you can find who believe in your vision and can help you achieve greatness. And as you know, the very best employees expect to be paid better than “above average” – top producers charge a premium, and are well worth the investment. In some companies, CEOs who are blessed to have a group of top performers are adopting the emerging strategy of routinely terminating the bottom ten percent of performers every six or twelve months. The rationale supporting this strategy is that flexes the muscles of all employees, keeping them on their toes, on guard, and competitive – with each other. And although this may sound barbaric, some swear by it while others believe it is a strategy that comes with some very expensive consequences:
1. Announcing that there will be public executions every year will immediately terrify some of a company’s best employees out the door, and into the arms of competitors. If management believes those employees will honor their non-compete agreement, they probably won’t – people need to earn a living.
2. For those who choose to stay, that team environment the company may have worked so hard to build will be smashed into tiny little pieces once the new law of executions hits the books. For employees, it’s all about winning the fight, and the managers will spend most of their days refereeing corporate cage matches. When arguments erupt over who owns an account or who should receive credit for an accomplishment, those Active Listening and conflict resolution skills will be put to the test nearly every day.
3. Many employees who typically wouldn’t lie, cheat, steal, or do anything else unethical to cover their backs and make themselves look like heros will reconsider. And why shouldn’t they? Each of them are truly living in a culture fearing survival.
4. Loyalty? Gone. When a company implements a new law that runs against everything loyalty stands for, the employee looks out for him or herself – not the company. Everyone becomes the enemy.
5. A CEO can expect to see employees express feelings of anger, resentment, disappointment and other emotions that will impact internal relationships as well as those relationships with customers.
For CEOs leading aggressive-growth companies, creating such a boiler-room culture may seem appealing on paper, but the expense of implementation will likely cost a company some of its best people, and worse, its ability to find people willing to work in what is perceived to be a cut-throat environment. What are your thoughts?