How to avoid the ‘law of crappy people’?

I don’t want crappy people in our company.  Ever.  Because we all work too hard and have sacrificed too much for some bad apples to drag the team down.

So I instituted a ‘bottom 10% rule’ (ie, bottom 10% gets let go every year based on stack ranking).  I think this is called ‘rank and yank’ at GE and mgmt consulting firms.  

We have a formula and process that we created for ranking.  Not perfect, will need to tweak over time.

Of course, the 10% rule got pushback from some investors, team members and even candidates.  Most were in favor.  But this makes me want to get some outside ‘anonymous’ opinions.

Has anyone else implemented something similar?  What does everyone think?  Am I being too draconian?

  • just fucking fire if they suck, unless you have like 500 employees having a 10% stack rule seems pretty unnecessary

  • I don’t believe the risk of being fired boosts up morale, or improves the quality of people working in a company. To me it’s kind of the opposite.

    What I do, to try to avoid crappy people, is talk to candidates we hire quite thoroughly, and try to get to know them before we hire them. In my opinion personality is 70% of the mix, and talent/skills the other 30%.

    Then, I look closely at the dynamics formed within the office. I would only let go someone if I feel the person is creating a toxic environment around him or her. At one point we had an employee in marketing who had a really bad attitude, she was constantly pointing fingers at others, she was deeply homophobic, so I talked to her over and over, and in the end we had to let her go, as she was creating conflicts all the time.

    But my point is that I believe making people feel safe and comfortable, and trying to create a friendly environment, where people get along, makes crappy people leave on their own, as they never adapt, or be pushed out by the rest of the team in a more natural way. I don’t think having people stress out over the possibility of losing their jobs over a is a good policy.

  • 10% is pretty arbitrary, and doesn’t allow for the possibility that everyone on your team could be a superstar. Also it just sounds like it would create an environment that encourages stealing credit, dicking your co-workers over, and general animosity, just so you don’t get stuck in the bottom 10%.

  • What?! There is a bunch of literature specifically emerging over how damaging the rank & yank system is to the longterm morale, culture, structure and sustainability of a firm. I believe even microsoft has stopped using it, based on negative effect.

    Think about it: Arbitrarily removing 10% of your workforce establishes a few things from the onset:

    You don’t know how/who to hire, so you always have a bunch of bad eggs at any one time.
    Regardless of what you preach or print as policy/culture, you clearly favour cutthroat over cooperation, hostility over synergy and you only want sharks with high backbiting/slime ability to rise to the top. Thus only such people would really want to work for you longterm.
    Even if you get big time, you’re established as a place for short term; a resume stepping stone for newbies, because nobody with a soul would plan on staying long.

    If you don’t want crappy people in your company, then don’t hire crappy people. More importantly, simply respect your stafff as people and don’t tolerate crappiness after you hire.

  • Employees are to a certain extent as good as you allow/encourage them to be. This system doesn’t account for that. What if somebody just had a bad year? Rock-star employees aren’t hired they are made.

  • What about your leadership skills? Do you have no confidence in your ability to help people perform better? I know some will always be shit, but they are usually easy to spot, and don’t need a 10% rule to weed out. I’d also look at your hiring practices. If 10% of you employees are really that shit, that makes me worried. I read somewhere that even Google has accepted it’s hiring practices ultimately only served to make their interviewers feel better about themselves.

    One issue, regardless of ability, that is hard to figure out, is ‘fit’. Sometimes even rock star developers just don’t fit in and work well with your existing team.

    • ++1

      Exactly. Whatever happened to fulfilling your primary role as managers, which = to develop people? Job skill interpersonal skill or working well with others. Companies want ready made but refuse to pay market rates, yet also refusing to develop talent. But they wonder why people keep jumping ship without a 2nd thought…

  • You should take into account how this affects your hiring practices. Does it make people want to work with you, or not? I know a small company that has had great success in hiring people because the co-founder has a reputation for being someone great to work for. Unless you are a large company whom people want on their c.v. it, ironically, may detrimentally affect your ability to hire great people.

  • Horrible idea. It’s demotivating, and eventually you’ll start getting rid of the good people, too.

    Better idea: Only hire people that your employees know, trust, and can recommend. If that means the company is small and grows slowly, so be it.

  • I think Dave Ramsey has one of the best hiring and firing policies I know of. The main thing he will fire for is gossip. No getting around it, it destroys far more than the target of it. Anyway, his company of 400 has less than 5% turnover. Plus, he is not rushing to hire. It takes almost six months, plus a dinner out with spouse or significant other for key positions. I think what a lot of startups are facing is the need to rush through everything. If you hire well, then you won’t need a ten percent rule. Plus, I guarantee your company has a reputation that might not be as pleasing as you think. Word gets around.

  • Why not fire the bottom 90% and keep the top 10%? This way you keep the best of the best and only the rockstars stay on for over a year.

    But seriously, having a quota for letting people go is a bad idea all around. As most commenters above have already pointed out, this does not help the workplace environment and it does not contribute to being of the team as a whole. Letting go the bottom 10% also might have you inadvertently letting go of some talented people. Hypothetically, if at the end of the year, all employees had similar performance, would you still let go the bottom 10%?

  • I highly doubt employees can concentrate to work well in such an environment as they will always be on tension, pressure, fear of losing their job at the end of the year since no matter what there will always be those people who will fall in the range of the bottom 10% no matter how hard everyone in the company works.

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