The Worst Management Theory that will not die

Investment Analysis Clubs Macro Economic Trends and Risks
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There’s only one problem with cracking down on low performers: It doesn’t work.

As decades of rigorous research have demonstrated, aggressive efforts to “raise the bar” on performance, as Zuckerberg put it, tend to backfire with remarkable consistency. CEOs may think they’re creating a meritocracy, but in reality they’re marching their companies straight into a trap of sunken morale, high turnover, depressed profits, and reduced innovation.

“In the short run, you might be creating some heightened performance standards and some accountability,” says Grant, who serves as the chief work-life expert at Glassdoor. “In the long run, you may be shooting your organization in the foot.” The evidence on making employees fear for their jobs, he adds, is clear: “They’re very shortsighted decisions.”

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The people who are lower performers often fulfill other roles. They let the metrics they need to fulfill slip to see to the betterment of the organization.

Being hired is an honor. Serving the company is an honor. Fulfilling a role is not the only way to participate. Things shift in time.

Corporate management is not worthy of much when they do certain things. As a society we know that but we do not honor that.

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I know this is true because I’ve seen it in action over a 4+ decade career. This is because of many reasons, for example, sometimes the low performers end up settling in certain departments, but the edict from above is always that each department has to fire the lowest 3% of their employees. But what if one department has 6% low performers and a different department has 0% low performers (for various reasons - maybe the management at that department is more aggressive in acquiring higher performers, maybe high performers are attracted to that department due to the tasks there, or maybe it’s just a fluke at that particular time). In the end, after the edict, you’ve fired 3% low performers in the first department, fired 3% high performers in the second department, and kept 3% lower performers in the first department.

However, what I haven’t figured out is when a large company has to reduce expenses, and has to reduce their total employment, how to do it in a more rational way. You can’t just rank everyone across the entire company because by their very nature, managers rank differently depending on their immediate needs or feelings. If a company is too well managed, “micromanaged”, then they may know how to do it, but they have other, much larger, problems. Because people, managers, everyone doesn’t like to be micromanaged. And micromanaging consumes a HUGE amount of effort, which diverts effort away from being truly productive. So you end up with a perfectly functioning, but low productivity, company. That’s a recipe for underperformance. Seems like for companies with at least somewhat disparate parts, maybe the best thing, instead of layoffs, would be to simply periodically “sell” (or divest, etc) the segments of the business that are underperforming. There’s no really good solution. Maybe the best solution comes up front by working hard on the hiring process and find ways to weed out the underperformers at the front end?

In a small company, it’s patently obvious who the low level performers are, and everyone, upper management, mid level managers, and all the employees are usually relieved when a lower performer is removed from their midst.

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I have found that the low performers keep the boss happy. They bring him his pot and coke. If they were not there the boss would be very unhappy and bring down everyone’s morale. We need more low performers all the way to the top.

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Sounds like Welchism. He advocated divesting any division that did not dominate it’s market, and firing 10% of staff every year.

Steve

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Start at the top…

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A mentor once told me the only management training most people get is being shown what not to do.

The problem is that if you are great engineer, programmer, scientist, etc. you will get promoted into management, but your great technical skills don’t necessarily translate into great management skills.

So the next step is to hire a management consultant. This step often backfires. The consultant might create a plan that sounds good, but can’t be implemented, or the consultant might not understand the company and culture, provide generic recommendations, or recommendations that distract from the mission.

Literally the dumbest management consultant recommendation of all time is the stacked rank or nine box as it is sometimes called. If 10% of the team is under performing, the problem is the manager, not the team. A good manager will have 100% performing well. If someone is underperforming, the manager should help him, or manage him out.

I’ve never met anyone who thought the nine box was anything other than complete, abject stupidity. Yet, it persisted for far too long which is a damning indictment of the ineptitude of the people who managed those corporations.

The second dumbest management recommendation I’ve ever heard of is requesting employees to write out five things they did last week. We’ve been hearing about in the federal government lately, but it happens in corporate American far too regularly as well.

For one, the managers should already know what their people are working on, or at least have a good idea. Secondly, top performers will delete a stupid email like that. Anyone who wastes time on a silly HR request like that is not a top performer and needs better management. However, it still has value because if upper management thinks it is a good idea, it is proof that management is inept.

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I was in a focus group to find out what we could come up with to make the company better. The consulting company that ran the focus group went to each person and asked them what would make the company better. I told them there was to many layers of management and that they need to have only 3 layers instead of 7. The consulting company started arguing with me that I didn’t know what I was talking about. I asked them were they here to find ways to make the company better or just to keep the company the same? It showed me right then and there that consulting companies are full of manure.

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https://www.yahoo.com/news/tens-thousands-fired-federal-workers-163555218.html

If this sticks as illegal and it pans out that Doge did the firings that leaves Elon open to civil suits. Assuming the illegality breaks a federal law. This can cost him billions of dollars.

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It does (separation of powers in the US Constitution). But he can legitimately claim it was all done at the specific and clearly-known-to-everyone directive of the impotent tate.

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It is more how the firings happened do they rise to illegal and is that breaking a federal law. The process was skipped.

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Neither. Their objective likely was to tell senior management what senior management wanted to hear.

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Pardon me? Pardon, what did you say?

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Ayup. That is how consultants make sure they will be paid to consult, again. McKinsey’s default recommendation is to reduce production headcount. Looking at what VAG decided to do, a few months ago, sounds like it is right out of McKinsey’s playbook. VAG has redundant divisions, that serve the same market as their core division. Each redundant division supports it’s own redundant overhead of honchos. VAG wanted to cut costs. Did they shutter the redundant divisions? Nope. They announced a program to reduce production headcount by 35,000.

Remember the story of the “happy, productive, worker”? The company kept layering redundant/useless people, on the back of the “happy, productive, worker”, until costs soared out of sight. To rein in costs, the company then laid off the “happy, productive, worker”.

Steve

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That’s a true statement.

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I think its fair to say when management fails to deal with the unproductive worker moral suffers. But a regular list that gets trimmed every year goes too far. It can create a survivor kind of psychology and even make for destructive competition. Sabotage the work of others?

Middle ground works but using reasonable performance standards.

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It is absolutely corrosive to morale. But, if all the “JC” cares about is if the work gets done, then he doesn’t care about “morale”.

Screenshot 2025-03-13 at 17-39-56 Reddit - https __preview.redd.it_work-hard-or-do-the-bare-minimum-same-paycheck-either-way-v0-m27vyay9p2he1.jpeg auto webp&s 79a13c9bcaf8b214299d1f1824dcfa98e94fa426
Screenshot 2025-03-13 at 17-39-56 Reddit - https __preview.redd.it_work-hard-or-do-the-bare-minimum-same-paycheck-either-way-v0-m27vyay9p2he1.jpeg auto webp&s 79a13c9bcaf8b214299d1f1824dcfa98e94fa426504×451 248 KB

According to the Wiki entry, RS embraced the Welchian “fire a certain number every year”, plan, close to the company’s end. Thing is, the RS program used no objective criteria. It was all a matter of if the DM liked a particular manager or not.

Steve

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Musk and the rest of Doge are harassing federal employees. That is a federal crime against a lot of federal employees. Federal managers can be sued personally if a federal crime takes place.

Yes, harassing a federal employee can be a crime, particularly when it involves threats, intimidation, or interference with their official duties, potentially resulting in criminal charges under federal law.

Here’s a more detailed explanation:

  • Federal Criminal Law:

18 U.S.C. § 111 criminalizes forcibly assaulting, resisting, opposing, impeding, intimidating, or interfering with any federal officer or employee while they are engaged in the performance of official duties.

  • Examples:

    • Forcible Interference: Throwing a binder at an IRS auditor during a disagreement, or punching an ICE agent to protect a friend from arrest, could lead to charges.
    • Threats: Threatening a federal employee with violence or harm, or threatening to harm their family members, with the intent to impede, intimidate, or interfere with their official duties, or with intent to retaliate, is also illegal.

  • Protected Activity:

Federal employees have the right to be free from discrimination and harassment at work, and retaliation for engaging in protected activity (like filing a discrimination complaint) is also unlawful.

  • Harassment Defined:

Harassment is unlawful when it creates a hostile or intimidating work environment that is offensive to reasonable people.

  • Categories of Harassment:

Harassment can be based on race, sex, national origin, disability, religion, or other protected characteristics.

  • Retaliation:

It is unlawful to retaliate against an employee for asserting their rights to be free from employment discrimination, including harassment.

  • Seeking Remedies:

Federal employees can pursue claims of discrimination, harassment, or retaliation through the federal Equal Employment Opportunity (EEO) process.

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If the EEO is closed down this requirement will have been exhausted.

Federal employees generally must exhaust the administrative complaint process with the Equal Employment Opportunity Commission (EEOC) before filing a lawsuit in court, although there are exceptions and timelines to consider.

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Yes, I agree. Pardon me if I was vague, but I think we might see a pardon in the future. Or, maybe they’ll find themselves under the bus.

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