Peter principle applies automatically and people at the top are idle, with less work or no work! They just feel, they are there for only strategic insights, if at all many of those have ever given a single strategic insight in decades. Lots of dead-wood make orgaisations top-heavy or top-sick. And if you are sick at the top, you have lost your mind and what pulls you down is your heavy, uncontrolled weight who knows nothing but law of gravity.
So, what is needed? ROB. Yes! Role-Based-Organisation (ROB). This Role Based approach makes the associate to be known by their role and not by their designation. Vadim(2008) illustrates that role based is very internal to the organisation and the structure of the organisation is influenced by the role that is played by the associate. The competency and responsibility of the associate are the two major factors which defines a role in an organisation. It can be inferred that in such a kind of role based organisation the competency of an associate determines the rewards and compensation.
UP or OUT
McKinsey adopted the policy which evaluates the performance of the employees and terminate who were failed in getting promoted by the organisation within a specific time and termed as up-or-out. The up-or-out policy was adopted by McKinsey in 1948 from a revolutionary old management concept know as the ‘Cravath System’ named after Paul Drennan Cravath who introduced this concept in the 19th century. On the go this concept became very famous and was inherited by many law and consulting firms. The Cravath system is widely known as the ‘Rank or Yank’ or the ‘UP-or-OUT’ system in the business world. Jack Welch the former CEO of GE who is awarded ‘Manager of the Century’ terms the same concept in his own way as the ‘vitality curve’. This strategy is known to be a huge reason behind the increase of revenue by 28 folds for GE.
Shyamal Majumdar a writer in the ‘Business Standard’ explains the style and concept of Jack Welch’s ‘Vitality Curve’ in one of his article ‘The Rank-and-Yank appraisal system’. According to the author managers should rank the employees under him/her in a 20:70:10 ratios. Jack Welch in one of his interviews points out that there are three ways the employees can be categorised. The first are the employees who have both results and values. According to Jack Welch these people are the great source of productivity and they should be appreciated and rewarded. The second category is where a significant amount of employee falls who has the values but not enough results to be in the creamy layer. As these standard performers are accountable for the organisation’s operational success they should be rewarded and given all support to lift up their performance to the astonishing level. The final category employees are the foot-draggers who don’t have values or give out results and eventually they have to be moved out.
Up-or-Out is a strategy which gets amalgamated with the culture believed to bring in fresh ideas, new skills and talented resources. The big blue chip organisation like Microsoft, GE, Ford, Motorola, Enron, Coke and Accenture which adapted this culture believes that this strategy will increase the productivity and performance of the organisation. Most of the organisations which possess this culture see that it is an opportunity to bring in new people who could have the ability of bringing a big difference. In addition Jeff Skilling former CEO of Enron Corporation explains in one of his employee meetings (2001) that they have to take such hasty decision in order to sustain even at hard times. He further argues that ‘’if a firm does not have a process of making hard decisions over the people who are not pulling their weight could pull everybody down’’. This strategy hark back a famous phrase ‘’Survival of The Fittest’’ quoted by Herbert Spencer.