Keyword: jerks

If you’ve been following along with me, you know that I’m a huge fan of clearing dead or diseased wood from your organization.  Nothing rots an organization more effectively than people who don’t carry their share of the load, or who complain all the time, or are jerks.  These people become a cancer to the team, and if you leave them around you send a very strong signal that this behavior is not only tolerated, but perhaps even preferred.  Removing these people from your organization is often the fastest, best, and maybe even the only cure.

So, after much pain and deliberation, you’ve decided that the only really good solution to your problem with that person is to simply get them out of your organization.  Good for you.  Now the question is: how do I do it?

The short answer is: quickly, like removing a band-aid.  Dragging it out is just like slow death, and it doesn’t make it any easier for either party.  You just need to buck up, sit down with the victim, and fire away.

No, I don’t mean to let them have it with both barrels.  If you’re firing someone, they don’t need to hear your long litany of reasons why this is the right thing to do.  You may in fact be better off just keeping it simple, and not getting into specifics.

But you do need to be honest.  You do have to tell them that there is a problem, you consider that problem insurmountable, and the time has come for them to leave.

You should do it quickly, frankly, and professionally.  Don’t talk about the weather and “those darn Red Sox”.  Don’t get wishy-washy and say “I think that maybe this is the right thing.”  You have to be definitive and not make this seem like a time for negotiation.

And you absolutely have to be a professional and take responsibility.  It’s not “the company is making me do this”, it is “I am doing this because…”.  Just like every other aspect of being a leader, it’s not “them” that are doing this, it’s you.  You have to be an adult and take ownership.

None of this is to suggest, however that you violate my number one rule for all employee job actions: no job action should ever be a surprise.  Period.  I don’t care if you are hiring or firing, promoting or demoting, giving a raise or laying them off.  If you sit down with the person, and the action comes as a surprise, you, not they, have done something wrong.

If you are firing someone, this is especially true.  They should have received steadily more dire performance appraisals.  They should have had at least a couple of different private conversations warning that the behavior is not what’s expected.  And they should never get mixed messages that makes them think that the behavior is sometimes OK.  It needs to be clearly, and always wrong.

This progression of warnings is not only true because it’s just good management, but it’s also the law in many places.  You can’t simply go merrily along telling someone they are doing fine, and then — BOOM — drop the hammer on them one day.  It’s morally (maybe criminally) wrong, and it leads to the whole organization wondering if they are next.

So be sure you telegraph your intentions, in several different ways.  Make that final conversation when you let them go be one they knew was coming, and is now finally here.  It will make the conversation easier for both of you, and will also make it less likely to turn into a debate, a negotiation, or worse, a lawsuit.

Finally, you also really should check out your local (usually state) laws and/or union rules if they apply.  As I say in my disclaimer, I am most definitely not a lawyer, nothing about this is to indicate you should violate any laws, regulations, or contracts.  Your mileage may vary.  Some conditions apply.  Yadda, yadda.

But, you’ve made huge progress, you’ve decided they need to go.  Good for you.  Now get it done with and move on with your life, and make your organization into that great team you envisioned all along.  Everyone, the team, you, and maybe someday even the victim, will be proud of you for it.

I have written more than a little about Home Depot and its CEO Bob Nardelli.  From their top-heavy “Culture Change Offensive” (which I found offensive here), and the silly army mentality Nardelli tried to force down everyone’s throat (and got stuck in my craw here), to Bob’s stunning pay package (which rubbed me raw here), and even his autocratic shareholders meeting (which I recounted here) Nardelli has provided plenty of fodder for these pages.  Well, it seems that the company and the board have finally come to their senses.

ATLANTA, Jan 03, 2007 — The Board of Directors of The Home Depot and Bob Nardelli announced today that they have mutually agreed that Nardelli would leave his position as The Home Depot’s chairman, president & CEO and as a Director effective January 2, 2007.

In other words: “get out…  like yesterday”.  Clearly the company simply tired of all the bluster and noise that went along with Bob’s “Army Mentality”, and the corporate results have been lackluster since he arrived.  And as I said in this piece, the mood in the stores is rancid.  It is a wonderful sign that the company saw the insidious effect Nardelli had, and chose to put an end to it.

But, the company didn’t completely come to their senses.  They continued to give Nardelli completely ridiculous payouts even as he exits in disgrace:

Nardelli and the Company have agreed in principle to the terms of a separation agreement which would provide for payment of the amounts he is entitled to receive under his pre-existing employment contract entered into in 2000.  Under this agreement, Nardelli will receive consideration currently valued at approximately $210 million (including amounts which have previously been earned or vested).

Holy Cow!  Even in the face of amazingly generous pay packages to CEOs, this one is a stunner.  This means that Nardelli has received, since becoming CEO of Home Depot, a whopping $400+ million in compensation!  During the same time, HD (the stock) has gone from a high of around $70 to the mid-30s.

And worse, much of this is clearly a golden handshake, or simply “go away” money.  It is optional, the board didn’t have to agree to it, but just wanted him out so badly they were willing to pay almost anything to have him go away:

This consideration will include a cash severance payment of $20 million, the acceleration of unvested deferred stock awards currently valued at approximately $77 million and unvested options with an intrinsic value of approximately $7 million, the payment of earned bonuses and long-term incentive awards of approximately $9 million, the payment of account balances under the Company’s 401(k) plan and other benefit programs currently valued at approximately $2 million, the payment of previously earned and vested deferred shares with an approximate value of $44 million, the payment of the present value of retirement benefits currently valued at approximately $32 million and the payment of $18 million for other entitlements under his contract which will be paid over a four year period and will be forfeited if he does not honor his contractual obligations.

The bulk of this is sickening…  I’m sure there were clauses in his contract that would have allowed the company to fight most of this.  I haven’t seen it, but I’d be shocked if it was all carved in stone.  I’m betting they didn’t have to accelerate his unvested and/or deferred options, they didn’t have to buy out his retirement plans, they just did it to get rid of him.

While I applaud Home Depot for ridding themselves of this jerk, I wish they had the backbone not only to fire him, but to not pay his blackmail too.  But I’m sure the company is better off without him.  The markets surely agree, the stock is up over 3% today alone on the news.

The Welches

In a recent article in BusinessWeek magazine, Jack and Suzy Welch advocated active pruning of the jerks from your organization.  They said “nothing hurts a company more than when the bosses ignore, indulge, or otherwise tolerate a jerk.”

They go on to compare employees on two scales, performance and values.  They talk about nurturing the good performance, good values players, and getting rid of the bad performance, bad values ones.  These are the obvious choices.  The third type is someone who is not up to par on performance, but deeply understands and honors the organization’s values.  Both the Welches and I feel that these people can be taught to improve their performance.

The fourth type is the star performer who doesn’t share the values.  They put it like this:

You know the type–who doesn’t?  They exist at every level in almost every organization.  These high performers can be mean, secretive, or arrogant.  Very often they kiss up and kick down.  Some are stone-cold loners, while others are moody, keeping those around them in a kind of terrorized thrall.

Jack unabashedly counsels you to get rid of these people.  He even recommends that you make it a public hanging, making sure everyone knows why the person was canned, so they can learn from the experience.

Although I don’t always agree with him, I deeply respect Jack Welch.  I’ve had the privilege of a special conversation with him, Warren Buffet, and Bill Gates (more on that wonderful story another time).  Jack meets many of my fundamental criteria for a great leader.  He is direct, well-spoken, and looks for the simple solutions.  Sure, he has made mistakes.  Like the silly infatuation with Six Sigma or that business about charging GE for his private jet time after he left.  But the man took a lumbering behemoth of a company and turned it into one of the real stars of the last 20 years.  That’s good work, and he deserves credit.

In this case, Jack is absolutely right on target.  As former head of HR at Microsoft, I have had to deal with my share of superstar jerks to be sure.  And I have seen first hand the deep, insidious effect these people have in other organizations as well.  I even watched a whole shop floor give a standing ovation as a jerk was finally escorted to clean out his toolbox.  Jerks just need to be expunged, even if they are the best performers.  The organization needs to know that company values are more important than performance. [Side note: Joel Spolsky of Joel on Software has an interesting take on values over performance in his post here]

Even though I read this article by the Welches a few weeks ago and thought it was right on, what brought it to my attention was a letter to the editor in the December 4th edition of the magazine.  In his letter, Rabbi Richard Davis argues that “firing inappropriate workers when they are top producers is not smart, and it may even be counterproductive.”  He goes on to say:

The cycle of firing, hiring, orientation, and training as a policy is risky and expensive.  New hires are the devils we don’t know.  Difficult yet valuable managers can often be brought along with less expense and with significant return on investment.  Professional coaching designed to focus on the developmental tasks of executive growth, with a commitment to align with corporate values, has been shown to produce effective, lasting change.

With all due respect to the Rabbi, and with the important note that I’m also an executive coach, he is trivializing the problem.  It is too easy to underestimate the damage that jerks do to the organization.  And making a leopard (a true jerk) change its spots (long lived habits) is exceedingly difficult.  Harder than training a new person.  Simply put: jerk is to the bone.  I am a firm believer in drawing another card from the deck rather than suffering with a hand that has lots of problems.  That next card could be an ace.

But, a key factor here is an environment that gets new people up to speed promptly.  You need to be confident that you have the systems in place to train and develop the newcomers in a way that is not “risky and expensive”.  You need this not only to backfill for the jerks you shot, but also for the health of the company in the first place.

Under Jack, GE had exceptional talent development systems — just look at all the CEOs they produced.  I also had the privilege of spending a day with their head of HR, to study their amazing development systems.  I’ll relate that fascinating visit some other time as well.  But the key to Jack’s low tolerance for jerks, and his belief in turning out the bottom 10% of employees as well, is his confidence that he could draw another card from the deck and be happy with the result.  His systems could identify the jacks and turn them into aces, and also quickly tell the twos and threes from the rest.

None of this is to say that I don’t think people never change.  I have seen true jerks mellow over time — lots of time.  I just don’t think you or your organization needs to wait them out.  And maybe, just maybe, your canning the jerk will be just the kind of cold water in the face they need to start turning around.  On someone else’s dime.