The Insider Guide to Careers
Insider information, secrets and tips about getting hired and building careers. For employees and job candidates.
A year ago, Google was in the news for firing not only low performers but also highly paid top performers. Why would this be the case? The answer lies in the high compensation. All employees are doing work, the nature of which is very replaceable.
An interesting tool employed by HR is called job analysis, which strips down all work into minimalist tasks. The tasks are grouped under knowledge, skills and abilities to create the job. The jobs are bundled in such a manner that no job is unique. The idea is that all workers should be replaceable. If there is an irreplaceable job, break it down and reconfigure it. Another cog should be able to effortlessly backfill the employee who leaves. The focus of job analysis is on driving the bargaining power to the employer because unique employees are difficult to find and replace. Therefore, companies are at the whims and fancies of unique, top-performing employees. An example was Anthony Lewandowski, who, despite being paid an exorbitant sum as a salary, still tried to run away from Waymo to join Uber. It was greed that ultimately did him in.
Imagine a company with 100 employees. Typically, assuming a bell curve, there are about 20 low performers, 60 average performers and 20 high performers. If the company indulged in deep layoffs, they would fire all bottom 20 employees. While the company thinks it has done a commendable job, the management problems have just begun. Much of the layoffs happen at a time when recruitment comes to a complete halt. The company is actively trying to decrease employees and increase revenue-per-employee ratios. To whom can the manager give the work of 20 employees? After all, the work cannot stop. Managers cannot do all that work themselves.
The 60 average employees are barely able to do their own work. Overload them, and they would collapse, not meeting their or the additional work deadlines. The only real option for managers is to give the work to the top 20 employees. The work of the top 20 employees just doubled. You can now see the unfairness in this approach. During layoffs, the life of average employees is unaffected. The work life of the top performers becomes brutal. Most are already performing at 200 to 300% of their potential. They got another 100% added to their tally.
To compensate for the additional work, the top performers would get a 5% or 10% increase in compensation. However, there is never a budget available during layoffs, as the company and the sector are under financial stress. The top performers cannot leave the company either because no other company is hiring. Thus, the overworked top performer is likely to become the next non-performer.
What happens at that point? The top performers see their performance decline and could be put on a Performance Improvement Plan (PIP). Once in a PIp, there is a high chance of getting fired. Around 70-90% of PIPs end in the employee getting fired. If you are fired because of PIP, you get no severance benefits. This is unlike the layoff scenario, in which there is a centralized quarterly budget for generous severance to the impacted employees. This is why I argue that getting laid off for non-performance is better than being placed in a PIP as a high performer.
This is why managers should be careful about preserving and nurturing their top performers. Unnecessarily overloading them with low-value work just because of a manpower shortage is a counterproductive and wasteful use of resources. It is better to find a way to push the work to some of the employees in the middle of the bell curve. The other option could be contract, part-time or short-term employees to tide over his demand supply shortage. This work allocation is something many managers should think about in advance and plan before layoffs happen.
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