Wednesday, November 3, 2010

Learning to act right (15)… Performance management up close

Learning to act right (15)… Performance management up close
Torrey Orton
Nov 3, 2010

Mick's Case – unavoidably conflicted retrenchment

It's easy these days to find stories of corporate malfeasance on large and small scales. So the world of business, which some think is outside the realm of ethics, is one rife with ethical challenges and short on ethical exemplars. The following is one candidate for exemplar status. Its power resides partly in the persistence of the main agent, Mick, and partly in the unavoidable complexity of the situation – performance management.

One meaning of an 'unavoidable complexity' is that there is no exit without carrying some of the dirt on you, as much inside as out. One reason there are few public examples is that ethical people tend also to be self-deprecating and so their stories remain only in the hearts and minds of those directly affected. Is it unethical to promote one's ethicality?! How could others learn from them?

Context - based on discussion June, 2003

In 2003 Mick was opening a new franchise in an established retail / wholesale field. He had six months to reach break-even, and with an upward trend in place towards profitability. The current figures were promising. If successful, the franchisor would hand him a number of other opportunities on a platter. If unsuccessful, he would lose money, face and a future. He had been recently retrenched from corporate life himself and did not want to return to it. This was a very small business. That means all and every aspect is directly managed by the owner(s), especially difficult people issues like the following. No HR department, legal staff, salaries clerks, etc.

The small initial staff was handpicked for sales competence. One of them, Jean, was a mid-40's woman with background in the industry and track record in retail. However, over the first 6 weeks of operation, she had become less and less effective in converting prospects to sales. She paid too much attention to details of customers' product selection, disregarded prospects with much greater sales potential and was unpredictable in work attendance. Other staff, especially Mick's number two Jim, were beginning to remark Jean's short-comings, including her impact on sales. Mick was feeling the heat of both his own perceptions of her and Jim's emerging perceptions of his management competence. Jim had some stake in the outcome because equity participation for him was just around the corner of their passing the start-up test.

Jean appeared to have some personal issues which affected her work. Her children were in Perth and she was palpably uncertain and anxious in her dealings with people at work – staff and customers. Mick sensed she was in a fragile state. However, so was the business. Mick himself had recent experience of "Stalinist" management in large enterprises and very much saw himself as an opponent of that style. It was a very painful situation for him to appear "Stalinist", especially to himself.


Nevertheless, Mick felt he had to let Jean go. A replacement had been found and was scheduled to start Saturday. Mick decided to retrench Jean on Friday. This was in keeping with the 3 month trial period of her employment contract. The payout was generous from the contract's viewpoint. His approach was to hand Jean her retrenchment notification and benefits at the close of business that day. He acknowledged her contribution so far and pointed out the reasons for retrenchment and expressed his concern at having to take this action.

Mick is troubled, still. First, he is aware that any retrenchment is violent for the retrenched. Second, he wonders if this one may not have been extremely violent from Jean's viewpoint considering her overall fragility - maybe a last straw kind of situation? Third, he wondered about his own contribution to this situation: did he make a hiring mistake in the first instance which exposed her to challenges she couldn't meet in her current condition? And, fourth, he didn't want to see himself as someone who does violence to others, though he knows that the viability of the business required it at that time.

July 25, 2010 email from Mick about my treatment of his work above

You give me too much credit. The replacement was organized in the background. I also had to balance up the supplier angle as they had a hand in finding Jean. And, yes, we did let her go. She was NOT up to the task. She should not have been there in the first place and the longer the situation went on the more it reflected on the total organization. I would like to think she was treated as well as could be done; but Torrey it was still a brutal act. Such acts occur when you take the time to "look and respect" staff. Whether or not they can do the job is an overlay on top of this.

As an addendum we had another one in the last 12 months. Greg – mid 50's, working in a small goods factory after he had been retrenched from a shipping company some years ago. His current employer was relocating to the other side of the city. He was looking for another job and he was recommended to us by a supplier (who we later found out had a relationship with Greg's daughter).

We sent Greg on a course – investment $4K. He appeared slow so we gave him more time. We spent time in explaining things we had gone over a number of times previously. He was not up to it so we set a deadline of 3 weeks and if no progress was made he would leave. After 3 weeks he had to leave. His performance was noted by customers and staff. I spoke to him at lunchtime and he left with a cheque straight away.

I later found out that that very morning he had refinanced his house. Knowing this, would we have done anything differently? NO.


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