The Daily Recruiter

One unintended consequence of the current economic situation is the failure of many organizations to effectively manage employee performance. How so, you ask? There are at least three ways this is happening.

First, the obvious one. When times are tough, organizations, and by extension, their leaders, who want to support, encourage, and reward good performance have fewer resources with which to say thank you. Raises, bonuses, perks, trips, and other incentives become scarce. This shouldn’t stop us from saying thank you, but, as we all know, it often does. Leaders whose imaginations are constrained by equating appreciation with stuff that costs money are at a real loss here. What they lose, in the short term, is the engagement, the willing and enthusiastic Discretionary Effort (we call it Oomph!) of those who are inclined to go the extra mile. What they’ll lose when the economy recovers is the people themselves, who, aided by a healthier employment picture will vote with their feet, taking their act elsewhere for a better deal.

A second problem is that well-intentioned leaders, who know that coaching and regular performance feedback are essential to developing good performers, stop doing it. They’re now performing the jobs of two (or more) people as it is, and they simply find it too hard to make time for formal performance evaluations, let alone real-time coaching.

But one of the most insidious workforce-related consequences of a bad economy arises from another often well-intentioned practice, ostensibly designed to minimize the need for layoffs. And that is the dreaded (gasp, scary organ music) hiring freeze.

On the surface, it makes impeccable sense: we want to avoid layoffs at almost any cost, so, rather than sending people home, let’s just not add any new positions, and in fact, let’s not fill the positions of those who leave, or get fired. The hope is that the hiring freeze will prevent the need for layoffs and the attendant pain and misery.

Local, state, and provincial governments are doing it. Universities, and - yikes - hospitals are doing it. So are pharmaceutical companies, American Express, Boston’s Museum of Fine Arts, Microsoft (although they deny it), the huge advertising conglomerate WPP, and even ESPN. Literally thousands of hiring freezes have been announced in the last year, and undoubtedly thousands more have been enacted - without announcement.

True hiring “freezes” are fraught with problems. Chief among them is the assumption that the blame for an organization’s budget crisis lies at the feet of its workforce. Stopping all hiring, when hiring isn’t the problem, is like treating swine flu with an antihistamine.

Secondly, employers stuck in an arbitrary, no-exceptions “freeze” mode won’t even be looking for that really great talent, who will be hired by a competitor who’s still on the hunt.

But here’s the biggest, baddest, ugliest (and most dangerous) problem: Managers faced with a hiring freeze, especially one that’s rigidly applied, are inescapably tempted to hang onto anyone capable of casting a shadow, without regard to talent or performance!

The following is a true story: We’ve got 12 people on this manufacturing shift. We could use 14, but we can get by with 12. Two of them are doing lousy work, and the other 10 know it. But the 2 slackers are getting stuff out the door. If I get rid of them, I won’t be allowed to replace them. So they’re staying. And no, I don’t have time to train them better, or to even tell them they’re doing a lousy job.

This one’s true, too: My nurses are running their feet off on this floor. I’ve got one whose attitude stinks. But I’m not saying anything. We’ve got a hiring freeze, and she’s better than no nurse at all, which is what I’d get if I let her go.

And this one: We’re already under a hiring freeze and I’ve been told to let one person go. Of the 12 people on my team I’ve got 2 non-performers and a kid (a good worker) who will be leaving in 2 months to attend college. I whack the kid because in 2 months I would have lost him anyhow.

So - what happens? We “put up with” things we’d never tolerate under ordinary conditions. The good workers see it and can only conclude that the boss’s standards have slipped. Some will be tempted to follow suit. Others won’t like what’s happening to the neighborhood and will begin plotting their escape.

Solutions? Here are a few thoughts:

* Limiting hiring activity is one thing. “Freezing” it is another. There’s nothing wrong with a significant hiring dialback, to preserve the jobs of your good performers. But let’s engage our brains in staffing the enterprise. We know it’s hard work. We’ve done it. But as John Houseman intoned in the wonderful flick, Brainpower, “You get paid to think!”

* In good times and bad, be as judicious about adding to headcount at work as you are at home. Just because you can add to the payroll doesn’t mean you should.

* Never base managers’ pay on the number of people they supervise. That one’s easy to figure out, yet most organizations actually do it.

* Imagine that we’re shouting this one: If you’re a manager, do your job, for Pete’s sake! Irrespective of the business conditions of the day, manage people’s performance! Give them timely, useful feedback. Tell them when they’re screwing up. And when they’re doing a great job. Promote, or otherwise find a way to reward those who deserve it.

* We’re still shouting, and we’ve saved the most important piece of advice for last. By all means, pluck up the courage to terminate those who’ve demonstrated that they shouldn’t be working here any more. Whether you’ve got a freeze or not!

About the Authors:

Bill Catlette and Richard Hadden, co-authors of “Contented Cows Give Better Milk,” and “Contented Cows Moove Faster,” are workplace experts who help leaders worldwide create a more profitable business by being an employer of choice.

They deliver their service by making keynote presentations at corporate and association conferences and conventions, conducting leadership training, conducting employee surveys, and consulting with company leaders to help them improve business results through people.

For Information on Booking one of the authors to speak for your next meeting or conference, Call

800-940-7006 (+1.904.720.0870 from outside North America)