The people are hired, now they need to work together, steadily improve their performance, be motivated, stay with the company and grow as leaders. In other words, they need to be managed.

To manage people a company should

1. Elevate the HR to a position of power and primacy in the organization. The HR people need to build leaders and careers.
2. The HR position in the organizational chart as well as in fact is a direct report to the CEO or without a doubt the second most important person in the organization.
3. Use a rigorous, non- bureaucratic evaluation system which means it is clear and simple – what I thought the person did well, how I thought they could improve. It should measure people on relevant, agreed on criteria; ideally done twice a year; and when talking about next career steps – as who could replace them if they were promoted.
4. Create effective mechanisms – read: money, recognition and training to motivate and retain. People want both recognition and money.
5. Face straight into charged relationships – with stars, sliders and disrupters.Sliders are people who hit a wall but were once good performers. Use either new jobs or training with them; if it does not work show them the front door.
6. Disrupters – these are individuals who cause trouble for sport – show them the front door.
7. You need stars or top 20% to win, however star’s ego has to be kept in check. You can never be afraid of your stars and ideally the star will be replaced within 8 hours, to show no person is indispensable.
8. Never treat the 70% for granted, treat them like the heart and soul of the organization.
9. Within the group are many stars, they need to be managed and shown appreciation.
10. Design the organization chart to be flat as possible with blindingly clear relationships and responsibilities. Managers should have 10 direct reports at a minimum and 30 to 50% more if they are experienced.

Letting Go is Hard to Do

If the above are in place, although letting people go is difficult the process will be easier because people will know where they stand and where the company stands.  3 reasons for layoffs are:

Firing for integrity violations or any form of ethical or legal breach.

Layoffs due to economic downturns – there should be preparation beforehand. People should have an idea of how the division is performing. Open communication should be the order of the day.

Firings for non-performance – if the person is ineffective in their jobs, it is seemingly easier to do, which is why effective evaluations are very important. If they are in the bottom 10% and the company has tried, it is much more open process for everyone and all employees will know where they stand. The part to understand is the boss owns the process – try to do it right. No surprises, no humiliation.

Linking to dividend paying stocks, it is easier and normal to pay attention to where the HR person is in the organization; how is the company developing new leaders; but most of what a company reports can be seen in how they let people go. It is not easy to close a plant or line of product knowing people’s lives are affected, however the company only has an x amount of resources. Times and legislation changes which mean changes happen. How reasonably open they are when something like that happens tells the true character of the company.

There are more questions than answers, till the next time – to raising questions.