20 – 60 – 20

20 – 60 – 20

If you’ve read any of our previous blogs you have surely heard of the Pareto Principal.  In brief, the Pareto Principle, or the 80/20 rule, states that for many phenomena 80% of the result comes from 20% of the effort. The principle has been named after Vilfredo Pareto—an Italian economist. We’ve used it to describe many aspects within a small business but today I’ll elaborate as it applies to the workforce and the workloads thereof.  The point of this elaboration is to illustrate how a company’s management can and should recognize the who, what and why of groups within a company and the caution we offer if you scale down, scale up OR how to reward ranks accordingly.  First, let’s expand that thought to include another philosophy.

Hearkening to the management philosophy of Jack Welch, once the great CEO of GE and an American Leader, he said that your workforce is divided into 3 groups:

• 20% – are your top tier achievers. They always get the work done, require little supervision and will accept what is on the table before them doing so consistently without complaint. They are your “go to” people when a task or project needs to get done. Also, they know the business, understand the big picture and seek to achieve high end goals. Should they ever feel that they are unfairly taken advantage of or not properly recognized, they’re the ones that will seek other opportunities outside the company. Often without warning, they will tender their resignation.
• 60% are your “wafflers”; generally good at their duties, require some supervision, can mostly get the job done. They are either headed up the ladder or down depending on their current workload. With the correct guidance and leadership, they are the ones where your new management candidates come from. Conversely, without attention, they can burn out, be left in the dust and fall to the lower category without proper attention.
• 20% are the underachievers. Those who have not managed to keep up, require greater supervision and typically take up 50% of managements time with following up and demanding follow-through. The 60% and the bottom 20% groups typically have no issue complaining about their lot in life, will threaten to quit or just make their managers job more challenging in general.

Jack’s philosophy goes further to explain that the bottom 20% are more of a deterrent to the operational workflow based on their participation and ambition. More to the point, they don’t care. If the company is experiencing a decline in business, this is where layoffs start. The top 20%, or the top tier achievers is where the workload ends up when a layoff occurs.

Because their attitude is “let’s get the job done”, they had little patience for the bottom 20% to begin with and will happily let you know it. They have no tolerance for improperly executed work or worse, not getting the assigned work completed. Moreover, they watch while management does NOT keep the bottom 20% on task or holds them accountable. Therein lies the rub. If the 80% do not keep their workloads and responsibilities in check, they know it.

As mentioned in the above description of the 3 groups, should the top 20% ever feel that they are unfairly taken advantage of or not properly recognized, they’re the ones that will seek other opportunities outside the company. Often without warning, they will tender their resignation. Thus, the point of this article. Having a system of accountabilities and responsibilities that are quantifiable is critical to keeping your top tier achievers satisfied and acknowledged. Of course, accountabilities are necessary at ALL levels. Heaven forbid you should hold your top tier achievers accountable while you let the other 80% work unattended.

On a side note, many companies use a seniority method in both layoffs as well as raises and benefits.  In fact, most union shops are usually tied to this philosophy.  Just because someone has been around longer doesn’t mean they are the best at what they do, and companies bound to the seniority methods risk ostracizing those that work hard, and when they quietly leave your employment, you are left with mediocrity at best.

A workforce system which is not based on merit is doomed for failure.  It is imperative that the top 20% are rewarded, and acknowledged.  Likewise, it is critical that the bottom 20% are dealt with, corrective action, stagnated professional growth, and termination are all the tools that, while sometimes uncomfortable, are important to use in the success of your company’s workforce.

You can love everyone if you are using “tough love”.  And I believe there is a place for everyone in this world, but the fact is, you may not have the right place for their employment… Let them go, and wish them well.  Because the last thing you want is to piss off your high performers that already feel like they are carrying most of the load. Do not ignore this very important message. If you fail to recognize and compensate your top tier of employees, you will do so at your own peril.

Disciplining the poor performers is just as much about fairness to the good employees.  Because good employees will NOT stick around in a mediocre workplace!  They are looking for a place to work that will challenge them, where they are appreciated, and most of all, a place where fairness is the rule of the day. It can be said that under performers don’t like their job. Sending them to work elsewhere grants them the uninvited opportunity to find something that they truly do like.

Fairness, equality, accountability and reward should be a part of every company’s core doctrine. Truth be known, if you don’t feel effectively appreciated and rewarded for your input, you have options. They may not be easy options but options, nevertheless. Take this metaphor in closing; Water by the bottle costs 50 cents at the grocery store. The very same water costs $2 at a convenience store, $4 at a sporting venue and $6 in an airport. It’s not about the value of the water, it’s about the place you get it. Perhaps you should consider where you are when you consider your own value.

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