Enron's system: rank and fire (2001)

I just don't really understand this "hire and fire" mentality. I took over running a group, and one of the first things I did was fire someone - he was really, really not productive, nobody respected him, etc. But it was a terrible experience. I <i></i>never<i></i> want to do that again.<p>What happened to finding better ways at hiring good people? Sure, times change, and yeah, you'll have to let a few go over time. All of these companies just seem to go with a test drive approach. And I rarely find any new, novel approaches on hiring practices.<p>These sorts of practices seem to breed a very impersonal culture, that just makes me biased against big companies. A culture I hope I'm never a part of again.<p>This article is pretty novel in that it's about Enron. But I'm sure you could substitute many more legitimate businesses, and the techniques would be pretty similar.

The <i>original</i> version of this strategy <i>is</i> sane, but it has to actually be followed. And in every "implementation" I have seen, it was not.<p>The critical part of this strategy is continuous improvement: to <i>not only</i> rank existing employees and lay off some, but to <i>hire new ones</i>. The NET should be no real change in numbers, but an increase in overall quality.<p>But guess what. Companies invariably failed to do the 2nd, and simply used this as a nifty new way to decide layoffs, during a hiring freeze. The result is predictable: a productivity and morale drain. What did they <i>think</i> was going to happen, that making teams smaller would magically make the remaining people more productive? Let's see: of the people left, the ones who then seem "relatively" productive are just those that didn't lose as many team members; there is no further indicator of who is actually most valuable. But that didn't mean that layoffs stopped: no, the next rounds simply started cutting to the bone.

Firing the bottom 15% every year automatically is just going to lead to a corporate culture of politicking and backstabbing, glory-hounding and not helping each other. I hesitate to call this an "unintended consequence" since it looks perfectly obvious to me.<p>I really don't think it's going to lead to the best actual performance of the company. With any metric, you really do have to ask "how is this going to be gamed" before implementing it. Unrelated example: <a href="http://www.thewelfarestatewerein.com/archives/2005/04/more_manipulati.php" rel="nofollow">http://www.thewelfarestatewerein.com/archives/2005/04/more_m...</a>.

I've just submitted "The Talent Myth", a great analysis of how rank and fire contributed to Enron's demise: <a href="http://www.scribd.com/doc/15668431/601TalentMyth" rel="nofollow">http://www.scribd.com/doc/15668431/601TalentMyth</a>