Most businesses have a normal distribution of talent — a limited number, say top 10 percent, of high potential, rock star performers, a bottom decile of underperformers, and a thick middle of 80 percent of folks who get the day-to-day stuff done. In well-managed businesses, there are clear feedback mechanisms to ensure that the bottom of the talent pack gets managed out efficiently and objectively. While at GE, Jack Welch popularized the notion that it was good to fire the "bottom 10" of his managers every year. On the other end of the spectrum, the better companies manage the top-end of their talent pool, providing mentors to groom this group of next-generation of leaders and compensating them differentially in recognition of their superior performance.
The challenge lies in productively managing talent's fat middle. What is the right people strategy for the average employee — the stalwart who is performing well enough, but is not necessarily a standout? Here are a few of the challenges with the middle base of talent:
• Almost by definition, they often get lost in the mix, lacking appropriate guidance and management attention. This creates an issue of not understanding who holds real potential to move up the talent curve with the right nurturing, versus those who have limited upward mobility, versus those who should not be at the company.
• They can be a drag on those who truly are the best. While not everyone can be above average, the more mediocre talent you have in a business, the more likely it is to have a negative effect on those who can really make a difference. This creates retention and motivation issues for your higher performers. There will always be a distribution, even if it is a forced curve, of talent potential and capability in a business. But the goal should be to raise the overall average of the entire pool, and avoid letting it get pulled down.
• In a similar vein, average talent can harm a firm's talent recruitment potential since those who are average tend to be more threatened by bringing in better people. The adage of "A's" attracting "A's" and "B's" attracting "C's" holds true.
So what should business builders do to better manage their talent base — especially in this middle area? Two simple ideas can help:
• First, the best practice of conducting regular and specific performance feedback is critical. It is equally important to make sure that the person doing the review is capable and respected. Senior people who are responsible for managing the middle pool of talent should also be managed on their own ability to see, sift, cultivate, and retain the very best of that pool. How you grow and mentor organizational talent should be an evaluation criterion for senior managers' performance. Mentees and direct reports feel differently when they know their own managers are being evaluated (with real implications for good or bad performance) on their ability to effectively manage, mentor, and cultivate talent.
• Second, at regular intervals of a person's career, there should be not just "performance reviews" but also what I call a "Fit Test Point." Too many times we see someone who can do the job, but if we are truly honest know that in the long-run they will be stuck in the middle of the organization. My sense is that companies spend more time discussing performance than they do "fit." Performance reviews are biased towards looking out for the best interests of a company — as long as someone is doing their job they have a place. A "Fit Test Point" is a tool to carefully consider the best interests of an employee. Is this person in product development really better served finding a position as an industry or market researcher, or is that analyst who can clearly make the next two rungs of the management track better served making a switch in her career now given the opportunity cost of time? We all know situations where instincts and experience alerted us that a job was not the best fit for someone, yet we let the person continue because they filled a short-term need or because we lacked the courage to have the honest "Fit Test" conversation. Consider key inflection points of one's career advancement and have the parallel conversation of performance and fit reviews.
Trying to serve everyone equally does not do anyone a service, but catering only to the top of the talent pool or overemphasizing the middle or bottom also does not work. An explicit strategy for managing each tier of talent needs to be in place. The public education system has shown that if we just settle, accept, and teach to the middle that is a formula for failure. As business leaders we should see how we can realize the full potential of each employee and help those who are not right for the business find other jobs where they can be more productive and happier.
Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Ball and vice chairman of the advisory firm Parthenon.
Thanks to Anthony Tjan / Blogs HBR / Harvard Business School Publishing
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