Contribuyamos con el medio ambiente Según el Panel Intergubernamental para el Cambio Climático (IPCC), seis millones de hectáreas de bosques primarios son deforestados cada año. Esto equivale a la superficie de un estadio de fútbol cada segundo. El cambio climático es un problema que nos afecta a todos, por lo que todos somos responsables de actuar al respecto. ESAN, escuela de negocios líder en el Perú, asume un compromiso con el medio ambiente a través de acciones concretas que contribuyan a preservar nuestro medio ambiente. Parte de este compromiso es la distribución de materiales de la semana internacional en formato digital. Con su apoyo, reducimos el consumo de más de 160 millares de papel, además de tinta contaminante y folders plásticos. Cada acción cuenta en el cuidado de nuestro medio ambiente. Es el único que tenemos y por eso agradecemos su colaboración. Ahora piense en cuántos estadios de fútbol fueron deforestados en el tiempo que le tomó leer esta declaración. ----------------------------------- Este material de lectura se reproduce para uso exclusivo de los alumnos de la Escuela de Administración de Negocios para Graduados ESAN y en concordancia con lo dispuesto por la legislación sobre derechos de autor: LEY 13714 Art. 69: Pueden ser reproducidos y difundidos breves fragmentos de obras literarias, científicas y artísticas, y aun la obra entera, si su breve extensión y naturaleza lo justifican; siempre que la reproducción se haga con fines culturales y no comerciales, y que ella no entrañe competencia desleal para el autor en cuanto al aprovisionamiento pecuniario de la obra, debiendo indicarse, en todo caso, el nombre del autor, el título de la obra y fuente de donde se hubiere tomado.

Winning the war for talent isn't justabout recruiting and retaining people. You've got

to invest in A performers, raise the game ofB performers, and-perhaps most difficult

of all-deal decisively with C performers.

80 HARVARD BUSINESS REVIEW

Axelrod, B., Handfields-Jones, H. y Michaels, E. (enero,2002). A new game plan for c players. Harvard Business Review, 80 (1) pp. 80-88. (AR30744)

.NewI Game Plan for

Playersby Beth Axelrod, Helen Handfield-Jones, and Ed Michaels

ANY SEASONED EXECUTIVE WOULD AGREE: The quality of a business's

pool of managerial talent is a critical driver of its ongoing success. Yet very

few organizations have a rigorous and consistent approach for managing

that talent. Most companies struggle with even the fundamental task of

assessing the relative performance of their people. And they are worse still

at taking appropriate actions based on such assessments.

The shortcomings are particularly acute when it comes to managing

underperformers. After all, a company's executives can experience real joy

in recruiting, developing, and retaining "A" and "B" players. But dealing with

"C" players is painful, and most avoid it.

Especially in these challenging economic times, companies need to have in

place a strong cadre of leaders, and they need to make tough decisions about

performance. Downsizing poses a particular challenge for many companies,

because if it's not done well, the decisions about who stays and who goes can

seem capricious. Indeed, it is difficult for employees to have confidence that

decisions made in hard times are fully informed if the company does not

JANUARY 2002 81

A New Came Plan for C Players

systematically and rigorously assess its managers' per-formance in fertile times. Regularly removing the low-performing managers from an organization helps ensureits vitality - in good times and bad.

Over the past five years, we've been researching whatit takes to build a pool of great managerial talent. We'vesurveyed 13,000 senior managers at 112 companies, stud-ied 27 companies with reputations for top-tier talent,and consulted with more than too companies workingto upgrade their talent pools. And we've observed that, asmuch as an organization's success depends on thecareful management of A and B performers, italso depends on the pruning of C performers. In-deed, we have found that high-performing com-panies are 33% more likely to take deliberate ac-tion on C performers than average-performingcompanies are.

How do the high-performing businesses do it?What follows is an approach distilled from theirmost-effective practices - an approach we liken toan "iron hand in a velvet glove."That is, companiesneed to establish a rigorous, disciplined process fordealing with low-performing managers and theyneed to treat these people with great respect.

Barriers to ActionBefore we discuss why dealing with C performers is so dif-ficult, let's clarify what we mean by the term. We are nottalking here about grossly incompetent or unethical man-agers; companies remove those individuals without hesi-tation. A company's C managers deliver acceptable re-sults - just barely. They scrape by, and perhaps evenprogress incrementally, but they rarely create anythingbold or innovative, and they don't inspire others. Notethat the " C refers not to the person but to the individual'sperformance in a given job. Some low-performing man-agers were A or B performers earlier in their careers -and may attain that level of performance again.

This begins to hint at why many companies under-manage C performers - at why, in fact, tolerating themhas become an unspoken code of conduct. Even thoughmanagers would love to make room for more talentedpeople, the act of confronting low performers is fraughtwith emotional, ideological, and practical barriers. Ac-cording to our research, the primary reason executivesdon't act on C performers is understandably an emo-tional one: They are unwilling to move on people with

Beth Axelrod is a principal at McKinsey & Company inStamford, Connecticut. Helen Handfield-Jones is a seniorpractice expert at McKinsey & Company in Toronto. EdMichaels is a recently retired director of McKinsey & Com-pany in Atlanta. They are the coauthors of The War forTalent (Harvard Business School Press, 2001).

whom they have worked for many years or people whohave contributed to the company for so long. In manycases, a C performer has formed a friendship with his orher manager over time, and that emotional attachmentcan cloud the manager's objectivity. Even when there islittle personal connection, the very human tendency toempathize with others comes into play. All of us havefelt humiliation and loss, and few of us would wish it onothers. Disciplining or firing someone is a painful and dif-ficult process for everyone involved.

1

Even though managers would loveto make room for more talented people,

the act of confronting low performersis fraught with emotional, ideological,

and practical barriers.

There are also ideological barriers to doing the hardwork of managing C players. Some managers erroneouslybelieve that all C performers can be developed into B oreven A performers - and that the organization should in-vest in people indefinitely for this to happen. Other man-agers believe loyalty should be reciprocated, even whenan individual's performance is lacking, or that it should beenough for someone to be trying his or her best. LesWexner, CEO of clothing retailer the Limited, struggledwith this issue of fairness. He asked himself, "Do 1 reallywant to identify a top, middle, and bottom tier of peoplereporting to me? Decisions around people's careers andresponsibility to their families-those are the toughest." Inthe end, though, he found the other side of the equationmore compelling: "If I don't make the tough decisionsabout the people who are preventing the enterprise frombeing successful, then 1 am putting at risk i75,tXK> peoplewho are depending on that leadership."

Finally, practical barriers often prevent executivesfrom taking action. Chief among them is the fear of liti-gation, fanned by the recent high-profile examples ofcompanies being sued for racial, age, or gender discrimi-nation after they implemented systems to identify lowperformers. Other practical barriers are the often onerousprocess of documenting underperformance and the fearthat resentment and negativity will spread throughoutthe organization.

For all these reasons, most companies fail to deal withC performers. Indeed, just 19% of the thousands of seniormanagers we polled believe their companies remove lowperformers quickly and effectively. And while the man-agers surveyed surely sympathize with the plight of the

82 HARVARD BUSINESS REVIEW

A New Came Plan for C Players

C player, 96% of them said they would be delighted iftheir companies moved more aggressively on low per-formers. They can see that their organizations would pros-per by doing so.

The True Cost of the C PlayerThe benefits of improving or removing low-performingmanagers are enormous, because their continued pres-ence weakens the company in myriad ways. Obviously,they don't produce the results that A and B players do. Intwo companies we studied, the A managers grew profits,on average, 80% in one company and 130% in the other,while the C managers achieved no profit growth. Thisanalysis points out what executives know intuitively:Holding on to underperforming managers pulls down acompany's performance.

The economic argument for upgrading a company'sleadership talent pool can be seen in several recent storiesof dramatic improvement in corporate performance:The Limited reversed a plunge in its stock price to sustaina 23% annual total return to shareholders over a 20-yearperiod. SunTrust Banks increasedits grovrth rate from 4% to 10% withina year. And the high-tech companyPerkinElmer tripled its market cap-italization in three years. All threecompanies had adopted new busi-ness strategies and performance-improvement initiatives, but allthree credit their successes in largepart to their aggressive efforts toreplace C performers with A andB performers.

Consider that every C performerfills a role and therefore blocks theadvancement and development ofother more talented people in anorganization. At the same time,C performers usually aren't goodrole models, coaches, or mentors forothers. Eighty percent of respon-dents in our survey said working fora low performer prevented themfrom learning, kept them from mak-ing greater contributions to the or-ganization, and made them want toleave the company. Imagine, then,the collective impact on the talentpool and morale of a company if just20 of its managers are underper-formers and if each of them man-ages ten people.

In fact, keeping C performers inleadership positions lowers the bar

for everyone-a clear danger for any company that wantsto create a performance-focused culture. C performershire other C performers, and their continued presencediscourages the people around them, makes the com-pany a less attractive place for highly talented people,and calls into question the judgment of senior leaders. Asan executive at Arrow Electronics told us: "It's incrediblydemoralizing for the rest of the team if you don't movepoor performers out-and the leader looks blind and outof touch."

Clearly, tolerating the C performers in a company neg-atively affects the better performers in that company.But it also has a dispiriting and stressful effect on theC player, who is being kept in a position where he or sheis incapable of performing well. Debra L. Dunn, vice pres-ident of strategy and corporate operations at Hewlett-Packard, put it this way: "I feel there is no greater dis-respect you can do to a person than to let them hangout in a job where they are not respected by their peers,not viewed as successful, and probably losing their self-esteem. To do that under the guise of respect for peopleis, to me, ridiculous."

Talent Management Must-Haves

The approach to managing C players that we're discussing in thisarticle is Just one piece of an overall program for managing talent effectiveiy.

Inordertocuitivatemanageriai taientat ali ieveis of the company, ieadersshould adhere to the following five imperatives, which distinguish high-performing companies from average ones. The imperatives are the subjectof our book, The War for Talent.

D Embrace a talent mind-set, and make talent management a critical

part of every manager's job.

B Create a winning "employee value proposition" that provides acompelling reason for a highly talented person to join and stay

with your company.

Q Rebuild your recruiting strategies to inject talent at all levels,from many sources, and to respond to the ebbs and flows in thetalent market.

Q Weave development into the organization by deliberately usingstretch jobs, candid feedback, coaching, and mentoring to growevery manager's talents.

D Differentiate the performance of your people, and affirm theirunique contributions to the organization.

The fifth imperative includes and goes beyond dealing explicitly with low per-formers. It addresses the broader need to differentiate the strong players fromthe weak players in a company's entire talent pool, and it implies the need toinvest in and grow A and B performers.

JANUARY 2002 83

A New Came Plan for C Players

An Iron Hand in a Velvet GloveTo build a strong talent pool, senior executives must reg-ularly remove low performers from leadership positions.They may want to take a different approach when itcomes to low performers in other positions, such as front-line or unionized workers. But the imperative to do so inthe senior managerial ranks is compelling.

To make this happen, companies need to apply aniron hand in a velvet glove. The phrase was coined byNapoleon Bonaparte to advocate firmness made morepalatable and effective through courtesy and manners.We use it to mean a rigorous, disciplined process fordealing with low performers that also treats each indi-vidual with fairness and respect. Such an approach can

counter the emotional, ideological, and practical barri-ers we cited earlier. Let's examine the application of theiron hand when it comes to dealing with C performers.

The iron hand is needed to overcome the procrastina-tion, rationalization, and inaction that naturally occuraround low performers. Companies need to establish adisciplined process that will make managers confront thisdifficult talent-management issue head-on. A disciplinedapproach will also bolster the integrity and credibilityof the company's human resource processes in the eyes ofall its employees. The discipline of managing C per-formers requires three steps: Executives must identifyC players, they must agree on action plans for each, andthey must hold managers accountable for carrying outthe action plans.

The Argument for Disciplined Talent Review

We surveyed thousands of managers in a broad range of compa-

nies about their approaches to talent review and succession plan-

ning. Consistently, we found that managers from high-performing

companies applied more attention, discipline, and energy to iden-

tifying and taking action on A, B, and C players than their lower-

performing counterparts did. The charts below show the percent-

age of corporate officers who strongly agree that their companies'

review processes demonstrate the following characteristics:

The CEO setsthe standardfor talent

Meetings includefrank, opendiscussion.

27%

we identitythe A, B, andC performers.

we turnassessments Intoaction plans.

52% 26% 37%

Executives in high-performing companies

21% 28% 8%

• Executives in iow-performing companies

Managers areheld accountablefor action plans.

13% 3%

Unfortunately, the tradit ional approach to succession planning often falls short...

In too many com-panies, the stan-dard for leadershipis vague. Withoutclearly articulatedassessment crite-ria, the caliber ofmanagerial talentbegins to erodeand is inconsistentfrom one unit toanother.

In a typical talentreview meeting,one managerpresents eachassessment whilethe rest listen withpolite, senatorialcourtesy. A half dayof presentationsoccurs at corporatecenters. Instead, afull day of intensediscussions shouldtake place at eachdivision.

Most companiesfocus on identify-ing successors,not on assessingincumbents. Theydon't calibratetheir assessmentsof managers. Andeveryone is ratedin shades of gray.

Most companiesdon't articulatewhat actions willbetaken regardingan individual'sperformance. Theydon't decide whatwill be done inthe coming year toadvance, develop,reward, demote,or replace eachperson.

Most companieshave no disciplinedprocess for ensur-ing that managersimplement theplans discussedduring the talentreview. Nor aremost managersmeasured on howwell they have up-graded theirtalent pools.

84 HARVARD BUSINESS REVIEW

A New Came Plan for C Players

IDENTIFY THE C PERFORMERS. In our survey of man-agers, only i6% of them strongly agreed that their compa-nies knew who the high and low performers were in thesenior ranks. To identify its low performers, a companyneeds clearly defined performance objectives and assess-ment criteria. Senior management must set distinct goalsfor all positions and measure individuals' performanceagainst those goals. It must also articulate a set of leader-ship competencies-the skills and behaviors expected ofall managers in the company. The CEO and division pres-idents have critical roles to play in setting these perfor-mance expectations, ensuring that the bar is set highenough and that it is consistent with thecompany's overall performance goals.

Executives then need to decide on asimple rating system to delineate perfor-mance levels - we've been talking aboutAs, Bs, and Cs in this article, but many cat-egorization schemes are possible. Somecompanies use a grid that plots perfor-mance on one axis and potential on theother to arrive at the ratings. SunTrust di-vides its 2(xi market managers into fourcategories: large-market growers, small-market growers,market maintainers, and strugglers.

The biggest challenge is getting managers to distributepeople across these ratings buckets. Without a rigorous as-sessment process, the outcome of such a rating system isfairly predictable: Managers will rate most of their peopleas"outstanding"or"good."Thus, a company's senior lead-ers need to drive the organization toward an appropriatedistribution of ratings. They should engage in robust dis-cussions, even debates, about the performance improve-ments required by the company and the magnitude of thecompany's talent gap. With that information, they shouldset targets for the percentage of managers they expect tobe designated as low performers.

There is no question that bell curves can be controver-sial, and they can be problematic-people often react neg-atively to the idea of strict adherence to performancequotas. But in organizations where identifying the high-est and lowest performers is a widely accepted philoso-phy, the distribution approach needn't be so strict-man-agers understand the overall goal and can be trusted tocome close enough to the distribution targets. In organi-zations where there is a great deal of resistance, the dis-tribution might have to be more rigidly applied. Eitherway, the groups or units being reviewed must be largeenough (at least 30 people) so that they reflect the typicalrange of performance levels in the company.

When pushing for clear differentiation between thehighest performers and the lowest, a relative distributionof assessments is easier to accomplish than absolute as-sessments. That is, managers can usually assess whetherMary's performance is better than Peter's and worse than

Nancy's even if they find it difficult to assess Mary's per-formance against the standard definition of a world-classmanager This relative approach also makes it clear thatthe objective of the process is to continuously upgrade thetalent pool by improving or replacing the lowest perform-ers, bringing in and growing more top performers, andraising everyone's game.

Assessing people and gaining insight into their strengthsand weaknesses requires a rich base of information andmultiple points of view. At the very least, three or moresenior leaders should be included in the discussionsabout each person's performance. The best companies

Companies need to establish

a disciplined process that will make

managers confront this difficult

talent-management issue head-on.

also use 360-degree feedback and self-assessments fromindividuals. Some leaders make a point of talking occa-sionally with the subordinates of the managers they willbe assessing, asking them what's going well in the busi-ness and what isn't. Those informal conversations can re-veal a lot about a manager's effectiveness.

AGREE ON EXPLICIT ACTION PLANS FOR EACH

C PERFORMER. Once leaders have identified the lowestperformers, they must articulate the specific actions thatwill be taken with each person in the coming six to 12months. The action plan will depend on several consid-erations: Does the person want to improve? Does thisperson have some strong skills that are valuable to thecompany? Is this person in a job that is not suited to hisor her skills? Has the person been in this job for too shorta time to be able to judge his or her performance? Isthere something in the individual's personal life that issapping his or her energy at the moment? How muchwarning, help, and time has this person already beengiven? Then, one of three types of actions needs to betaken: Improve the C player's performance in this job toat least a B level, move the C player to a job that bettermatches his or her skills, or ask the C performer to leavethe company.

Certainly, some C players can improve their perfor-mance substantially if given the direction and the devel-opmental support to do so. For these people, the actionplan should include the specific skills and results thatmust be demonstrated, clear timelines for accomplishingthese improvements, and a description of the coachingsupport that will be provided. The message to the C per-former should be unambiguous and encouraging. Leaders

JANUARY 2002 85

A New Came Plan for C Players

should be aware that some C players will improve, butothers won't, and they should take care not to overinvestin the latter.

When development efforts are not successful, the com-pany must either move C performers to more suitablejobs or ask them to leave the company. The Home Depot,SunTrust, and Intel are three companies that first try tofind their C performers roles in which they can contributemore successfully. The Home Depot, for instance, willeven consider demotions: If a high-performing store man-ager is promoted to district manager and then fails in thatnew role, the company sometimes offers to move thatperson back into a store manager role. Some people ac-cept the move; others prefer to leave. This approach al-lows the person to stay with Home Depot and allowsthe company to leverage the talent it already has. But thecompany also runs the risk of placing people who have

What About A and B Performers?Acting on C performers is only part of managing a talent pool effectively;companies need to faejust as deliberate in managing A and B performers.

The A performers create significant value for their companies directiy andthrough their leadership of others. The objectives vwith A performers are toaccelerate their development and to do everything you can to retain them.

The B performers are the solidly contributing majority of a company's man-agerial force. Collectively, they are critical to the success of the business. Theyshould be developed and affirmed sothey realize more of their potential andfeel valued for their unique contributions.

Ultimately, A and B performers require the same types of developmental

actions, including the following:

• Accelerate their professional development through a steadystream of challenging job assignments.

• Encourage their involvement in tasks outside their jobs so theyare connected to a broader network and build a stronger senseof belonging.

• Assign mentors to nurture their development and to help

retain them.

• Offer candid feedback about their weaknesses, and praise themfor their distinctive strengths.

• Recognize and reward their contributions.

One challenge for executives is determining hovi; to allocate a company'sscarce resources among the A and B performers. High-quality coaching, sea-soned mentors, generous compensation, promotions, and highly visible rolesare often inshortsupply,sothey need tobe invested in those people with thehighest performance and potential.

plateaued into important managerial roles or of transfer-ring problems from one unit to another.

Companies that are unwilling to take that kind of risk,such as GE, Arrow Electronics, and PerkinElmer, ask thosewho have failed to improve in their job to leave the com-pany-except, of course, if there was an obvious mismatchbetween the individual and the position. Bill Conaty,senior vice president of human resources at GE, explainedthe company's philosophy: "We are continually raising theperformance bar for all our employees, so the sooner inone's career that performance issues are candidly ad-dressed, the better for all concerned."

HOLD MANAGERS ACCOUNTABLE. Even the most ex-plicit action plans will fail if managers are not compelledto carry them out. Senior leaders should hold their man-agers accountable for building strong talent pools; carry-ing out the actions to improve or remove C performers

should be an explicit part of that.^ ^ ^ ^ ^ ^ ^ ^ _ First, in a very formal sense, the

CEO and a senior human resourcesexecutive should regularly follow upwith each of the unit leaders tocheck on implementation of any ac-tion plans and to help them over-come any barriers. At SunTrust, forinstance, this follow-up process in-cludes a tracking system that reportson performance management ateach of its 30 banks, allowing theCEO and division heads to see at aglance which banks are progressingwell and which are not. The reportshows the number of people whowere identified in the last reviewprocess as C performers, it outlines thepercentage of people who are in ex-plicit improvement programs; whohave adequately raised their perfor-mance; who were moved to moresuitable positions; who have left thecompany; or who are still in placewith no progress. Other companiesformally check the progress of anytalent action plans during their quar-terly operational reviews.

SunTrust's leaders have institutedanother practice that many morecompanies should imitate: They basea portion of their managers' compen-sation on how well they strengthenthe talent pool. Up to 20^. of the bankheads' bonuses depend on meetingthe talent-building goals agreed to intheir annual talent reviews, whichoften include specific objectives for

86 HARVARD BUSINESS REVIEW

A New Came Plan for C Players

managing low performers. This kind of formal account-ability should be reinforced informally as well. In fact, fre-quent casual inquiries, advice, and encouragement fromCEOs and division presidents may go furthest to signal theimportance placed on effective talent management.

Of course, managers who are being asked to do some-thing about their C performers should receive full sup-port from their human resources and legal departments.But those groups sometimes hinder managers' efforts byadvocating protection of employees and avoidance of alllegal risk. Significant effort may be required to reorientthese professionals toward teaching, counseling, andprodding line managers to exercise their talent-management responsibilities.

Companies can take steps to reduce the riskthat their termination decisions will be chal-lenged in court. Examples include early identifi-cation of performance issues in writing, with anopportunity for employees to address them;monitoring to assess whether certain groups in-advertently represent a disproportionate shareof the proposed terminations; and offering sev-erance in exchange for a release of legal claims.

All of these iron-hand steps-identifying C performers,developing action plans for them, and holding managersaccountable for implementing the action plans-are bestcarried out through a talent review process, which theCEO and other senior leaders conduct at least once a yearin each division.

Ensuring Fairness and RespectSo far, we've been discussing the iron hand of disciplinethat companies need in order to identify and deal withC performers. But doing so in an insensitive way would beinhumane and could cause tremendous ill will betweenthe organization and its employees. Companies must bevery deliberate in ensuring that low performers-like allemployees - are treated with dignity, respect, and care.That's where the "velvet glove" side of this directive comesinto piay. Senior management should note that candidfeedback along the way, instructive coaching, and gener-ous severance packages can help to ease the burden forunderperformers, reduce managers' reluctance to identifylow performers, and enhance trust in the way the com-pany deals with its people generally.

DELIVER CANDID FEEDBACK ALONG THE WAY. Sugar-coating the truth about subpar performance is disre-spectful and unfair; people need regular and candid feed-back on how well they are doing and what they need todo to improve. Not telling people where they stand de-prives them of the information they need to take respon-sibility for their development and to make informed de-cisions about their careers. Fully 89% percent of managerswe surveyed said that candid, insightful feedback is very

important to their development-yet only 39% said theircompanies do a good job of providing it.

All managers, no matter the level of their performance,have some distinctive strengths and some significant weak-nesses that have been the basis for their past successes andfailures. Telling C managers about their strengths affirmsthem and helps them find their way. Likewise, C perform-ers benefit from unambiguous feedback about their weak-nesses so they can overcome them. Most managers needto get a lot better at delivering both kinds of honest, con-structive feedback. This feedback should be delivered inwriting as part of an annual performance review and

Sugarcoating the truth

about subpar performance is disrespectful

and unfair; people need regular and candid

feedback on how well they are doing.

informally throughout the year. Termination for low per-formance should never come as a surprise.

OFFER INSTRUCTIVE COACHING TO HELP C PLAYERS

IMPROVE. Telling people to improve without providingthe requisite coaching and support is unhelpful; the in-dividual may feel like he or she is being set up to be fired.C performers need specific guidance on how to do thingsdifferently in order to make a significant change in theirperformance.

One effective practice uncovered by our research wasthe formal "corrective action plan" used at Arrow Elec-tronics. This program is more constructive than punitive;it specifies what the individual must do to improve withina defined period of time (up to six months), and it re-quires the supervisor to provide frequent coaching tohelp the person achieve these new behaviors. If perfor-mance has not sufficiently improved at the end of thatperiod, the person is asked to leave - but Arrow reportsthat about half the people who go through the corrective-action process succeed and sustain an acceptable level ofperformance consistently thereafter.

GIVE THE C PERFORMER GENEROUS SEPARATION

SUPPORT. When it finally comes down to firing someonefor subpar performance, providing the individual withgenerous support goes a long way toward lessening anyhardships, anger, and legal risks. Every company shouldhave regular policies and procedures for severance pay-ments. They should also have the flexibility to go beyondstandard compensation packages wben confronted byparticularly difficult cases. Some companies deliberatelyprovide very generous severance as a way to make thewhole experience more palatable. But the support should

JANUARY 2002 87

A New Game Plan for C Players

go well beyond money. It should include outplacementservices to help the person find a new job, as well as coun-sel and job leads from managers in the company. An officeand secretarial support can also make the search processmore manageable.

Leaders may also need to help the C performer throughthe emotional turmoil of being terminated. Chuck Okosky,formerly vice president of executive development at GE,recalls one senior manager he helped through the exitprocess: "I spent several hours with him immediately afterhis boss fired him. He shouted, cried, and talked about hisfamily. It was a way for him to off-load his anger and getthrough the negative emotion as quickly as possible."Over the next few months, Okosky introduced the man-ager to outplacement consultants and counseled him onthe types of jobs he might consider pursuing.

All too often, the leader avoids contact with the C per-former after firing him or her. But the leader and HRexecutives have a responsibility to help this person exitthe company with dignity. They have to transcend theirown discomfort and support the individual through thisdifficult transition.

Start at the TopRecently, a BusinessWeek columnist asked GE's Jack Welchto sum up why he was so successful."My main job was de-veloping talent," he explained."I was a gardener providingwater and other nourishment to our top 750 people." ButWelch also hastened to add, "Of course, I had to pull outsome weeds, too."

This comment underscores the importance of dealingwith low performers. It also emphasizes that upgradingthe talent pool must start with commitment from the top. Arecent study of unsuccessful CEOs underscores this point:It suggested that the most common reason for the CEOs'

failure was that they didn't remove the low performersfrom among their own direct reports. As the authors of thestudy, Geoffrey Colvin and Ram Charan, reported in For-tune: "The failure is one of emotional strength."

Any company embarking on a talent upgrade would dowell to address its senior-most management ranks first-its top 50 to 150 managers. With such a small group, theCEO and other senior leaders can be directly involved andcan ensure the integrity ofthe process. It also means thatwhen the process is subsequently pushed down to the next200 to 350 managers, the executives conducting the talentreview will have experienced the process and will be bet-ter equipped to implement it. Companies should not pushthe talent review process beyond the top few hundredpeople until it's working very well at that level; the re-quired skills and values take time to build, and legal andmorale risks grow with the size ofthe group affected.

Overcoming the natural tendency to tum a blind eye tounderperforming managers starts with the dual recogni-tion that building a strong talent pool is critical to drivingthe company's performance and that efrectively manag-ing low performers is essential to doing that. Indeed, reg-ularly improving or removing C performers is good forthe individuals involved, good for the people aroundthem, and good for the company.

Decisively dealing with C performers isn't about a one-time housecleaning or downsizing. It's about constantlyholding the company's performance bar high and makingsure that the company's leaders live up to that standard.Nor is it about being tough on people; it's about beingrelentlessly focused on performance. ^

Reprint RO2OIGTo order reprints, see the last page of Executive Summaries.

To further explore the topic of this article, go towww.hbr.org/explore.

CF-O- C.O.O.E.l-E.l.Q.

0

HARVARD BUSINESS REVIEW

Harvard Business Review Notice of Use Restrictions, May 2009

Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for

the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material

in academic institutions nor as corporate learning or training materials in businesses. Academic licensees may

not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any

other means of incorporating the content into course resources. Business licensees may not host this content on

learning management systems or use persistent linking or other means to incorporate the content into learning

management systems. Harvard Business Publishing will be pleased to grant permission to make this content

available through such means. For rates and permission, contact permissions@harvardbusiness.org.