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  • Mark Shaw

Reinvent How You Manage People.

The lead story in July/August 2015 Harvard Business Review was titled “It’s time to blow up HR and build something new”.

Some evidence they provided to support their view included:

  • Annual performance reviews don’t work

  • Real outcomes are achieved through informal networks not formal organisation structures

  • Compliance-based policies and processes built to the lowest common denominator actually dis-engage high performers and doesn’t stop poor performers ignoring such rules

  • People get paid to add value, not turn up to do a job

  • Personal values, not documented rules, drive behaviour 

  • Identifying people-risks and proactively managing escalating people-problems is more important than ticking the box

I was not surprised by the findings or the advice to build something new.

Based on my 20 years’ experience, I’d like to offer something new; something that over this time has overcome all the problems listed in the article.


Start by understanding and avoiding what I and my colleagues call “The 2% Effect” which is trying to manage everyone based on the lowest common denominator often based on a tick-and-flick design.  Instead base your policies, processes and supporting systems on the needs of the 98% rather than the problems caused by the 2%.  Or as a senior partner in a law firm described it “stop creating red light policies and start creating green light policies”.  


Next manage the problems caused by the 2% by showing how their behaviour causes a management problem.  Now adopt a goal of turning around the unacceptable behaviour or terminating the employment arrangement.  You see, line managers can tell you who is consistently demonstrating unacceptable behaviour.  HR can then help to articulate the management problem and now together with the employee, everyone can work together to solve the problem.  For over 17 years, on the small number of occasions where a turnaround could not be achieved, this approach has successfully justified the termination decision.


This contemporary approach of green light policy settings coupled with a turnaround or terminate approach to unacceptable behaviour has delivered significant business outcomes including increased productivity, profitability, engagement, retention and compliance.

Remember while the evidence against the old approach is over-whelming and growing daily, we can’t just blow HR up.  We have to replace it with an approach better suited to our contemporary times.


So I encourage you to do something new.  I encourage you to try avoiding The 2% Effect by moving to green light policies combined with a goal of turning around unacceptable behaviour or terminating the employment agreement.  


The results I have seen are fantastic and I hope you want to achieve similar success.

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