May 2006 – Staff culls

The traditional lunchtime quails’ eggs must have stuck in a few throats last week at the annual conference of the Institute of Directors in London when Steve Ballmer, chief executive of Microsoft, endorsed the Jack Welch recipe for improving executive excellence – the annual staff cull.

Mr Ballmer suggested that employee culling was most effective when applied in the upper echelons of a business. “The key thing we focus in on actually is making sure that we’re applying the discipline of involuntarily terminating executives,” he said.

“You can’t just look at the lower level people. You’ve got to ask every day: ‘do we have the right leaders? Are we promoting the right people? Are we moving-on the right people out of our leadership team?’ Because it’s just so important for the kind of culture and greatness to which we and our people aspire.”

He was speaking in a week that resembled the start of the duck hunting season in Government when the future of various Labour cabinet ministers was looking somewhat wobbly amid numerous demands for resignations and dismissals.

Will the annual cull become a fact of life at the top of big companies? Is it the way we want our employing institutions to operate in future? The “vote off”, after all, has become a regular feature of popular entertainment in the UK since the appearance of Big Brother and The Weakest Link on prime time television in 2000.

In the past six years it has spread to all manner of other programmes such as Pop Idol, Strictly Come Dancing and I’m a Celebrity Get Me Out of Here. If it isn’t viewers then it is an expert panel or some larger-than-life authority figure such as Sir Alan Sugar telling people: “You’re fired”.

Far from cringing at these shows, many television viewers seem to be drawn towards what has become a winning formula of ritual humiliation. Such is the power of TV that prospective contestants are queuing up to experience their 15 minutes of fame, whatever the cost to their dignity.

Perhaps I am oversensitive to the trauma of rejection. As a child of the 70s before the advent of the Thatcher years, I could depend on the collective protection of the trade union. Had it not been for the union I would have been culled from my first job and possibly my second. But bullying bosses thought twice before they crossed swords with the union. I was reared, therefore, in a more balanced employment system where staff agreements ensured that people were given time and assistance to develop.

To be fair to Mr Ballmer, employee development is also a priority at Microsoft. “We invest in the tools and technologies that really tell them (employees) they are the number one asset,” he said. Microsoft is a company that respects its employees who know the deal under which they are employed as they move through the business.

Whittling away less talented employees would seem a logical way of improving staff quality but where do you stop? It is not clear to me whether there is any end to the process that might be viewed as something akin to the constant sharpening of a pencil as the point begins to blunt.

Where also does this system place companies within society? Where does it leave compassion? Where does it leave a company’s sense of inclusiveness? Is it part of our natural disposition to remove the weakest links? One lesson from the game show is that sometimes people are prepared to co-operate in order to get rid of the strongest link.

In companies a survivalist culture promoting political acumen can emerge in the face of a regular culling policy. In its worst manifestations it leads to back-stabbing and toadying behaviour. A more typical strategy among employees is to “keep your head down” and blend in to the furniture. The most vulnerable people in such organisations are those who place themselves in the line of fire.

Mr Ballmer was suggesting that to seek a leadership role was to do just that. In this case fortune favours the bold, but there is an associated risk as he well knows. His own job is said to have been on the line during the original Windows project and there have been calls for his head again this year among some employees disgruntled at delays to Microsoft Vista, the successor to the Windows XP operating system.

Fear of the annual cull can change team dynamics in subtle ways. Most of those who have worked in teams will have “carried” weaker members. Where people are willing to work at improving themselves, the goodwill of their colleagues is often maintained. But this goodwill is not always extended to disaffected loners perceived as no longer pulling their weight, no matter how talented they may be.

It could be argued that such fractures in working relationships are more likely when competition is fierce. But a theory put forward by Gary Becker, the Chicago University-based professor of economics, suggests that mutual support among colleagues can be restored with team-based rewards.

What he has called the “rotten kid theorem” argues that even the most selfish family members will help their brothers and sisters if the distribution arrangement for any future inheritance is contingent on individual needs. To help siblings increase their personal incomes, therefore, will be to increase the rotten kid’s pay-out in the long term.

This would seem a more sensible system than an “every man for himself” environment. But it does not deal with those who cannot or will not be helped to help themselves.

I once found myself in a yacht race where the majority of my fellow team members were seeking the exclusion of a crew mate who they regarded as unfit for a testing sea passage through the Southern Ocean. They were overruled by the skipper. In the event the crew member struggled to cope with the conditions and left the race before the following leg.

Hugh Flouch, Managing Director of Talent Management at Hudson, the recruitment company, believes that some employees do sometimes find themselves beyond help. “Far from being cruel, freeing them to pursue a fresh start can be as good for them as it is for the business. Retaining for the sake of retaining is damaging for the long term health of both the company and the individual,” he says.

Sometimes, perhaps, exclusion is better for everyone, particularly where competition is extreme and where people are being encouraged to stretch themselves beyond a sustainable effort. Who wants to work in that kind of atmosphere?

The problem for many employers and employees, even those in the public sector, is that extreme competition, characterised by rapid change, is beginning to overtake many sectors of society where people may have once opted for an easier life.

A typical result is large scale re-organisation. When this happened at IBM, there were those who said the company’s initials stood for “I’ve Been Moved”. In this kind of climate, those who can master the party game of musical chairs, will be the ones to secure their future. The real skill is all about timing.