Corporate Latency and the Evolution of Human Capital Management

This is the second article in a series of six focused on the Evolution of Human Capital Management.

Ever hear something similar?

  • “Brilliant guy, but toxic.  Just too important to the business though to do anything about his treatment of others.”
  • “She’s better than no one – and you know if we fire her we won’t be able to backfill.”
  • “Oh well, we can’t address his performance issues –he is “protected” you know.”

I was working with an organization on defining their talent and recruiting strategy.  They were on a wild growth trajectory and yet were losing more people than they were hiring in their key business development group.  I was asked to investigate.  The findings weren’t hard to come by and well known to the team.  

The lead designer was brilliant (amazing, freaky genius type) but not a nice person.  He was quick to criticize, even quicker to terminate because someone didn’t fit or didn’t “get it”.  He usually wasn’t even civil. He had held his position for over a decade.  His “peculiarities” were well known yet swept under the rug.  This behavior was tolerated until the Company lost another critical design talent expressly because of the way he had been treated by the lead.

We have many examples with twists and turns as many and unique as the people we work with each day.  While performance management is an entirely separate topic, there is something that we need to expose to the light of day:  what I label corporate latency.

Courtesy: Stock Photo Secrets

Corporate latency is the condition where an employee remains in one’s role well beyond the point that performance warrants.  They may lack skill, engagement or are uninterested in building relationships. The situation is well known – which is one of the insidious elements of such a person’s tenure.  

Managers may shrug off the importance or the impact of these individuals on an organization.  Leaders might acknowledge the situation, falling prey to “more pressing priorities” (delays become institutionalized). Colleagues comment off line about how they feel about the situation (commiserating). Yet, no action is taken.  These “poor fits” are well known, their impact felt though probably not fully quantified, and the individual probably knows they are in some way not “aligned” (for lack of a better term).  All know that the corporate balance between stability and upheaval in these situations typically tilts towards stasis.  As your biologist friends will tell you, stasis is the state where internal disturbances percolate with little or no change occurring.

When one starts to ponder such situations, they seem so off kilter.  Performance is the coin of the realm. Check.  Fit or performance issues are known. Check.  Then why isn’t anything done?  This is the question posed to a team of seven bright minds from the University of Houston’s Bauer School of Business.  Together we studied the issue for a full semester; together we learned a great deal.

Organizations are apprehensive when it comes to dismissing or reassigning employees who lack a positive mindset, interest or skill or do not necessarily contribute to the progression of company goals.  The delay in terminating poorly performing employees has significant impact.  Make no mistake – everyone sees poor performance, lack of commitment and even substandard treatment of others.  Why isn’t action taken?

The Bauer students reported seeing organizations hesitant to act for a variety of reasons:

  • Management reluctance – Timing, “how bad can it be?”, “it will blow over”, get better, or re-assignment will fix this are all managerial responses to ongoing performance issues.
  • Retaliation by the employee (legal action) – The Bauer students recounted occasions where no action had been taken due to fear of retaliation or escalation to legal action.  Inaction was attributed to letting things simmer – why make things worse?  And yes, managers feared igniting law suits.
  • Employee relationships – “Sid is tight with Jay and we need Jay to complete the project.” is an example of where aware yet hesitant, management elects not to address these situations.  Ripple effect, unintended consequences or the unknown freeze managers from taking action.
  • Culture/environment – “We just don’t fire someone for not fitting in”, or “Ali will come around, he is just going through a rough patch”. The culture can place unknowing restrictions on team leads from effectively addressing people issues impacting performance.
  • Costs of replacement – Whether it is unique or hard to find talent, or simply the time lost to recruiting there is real concern about terminating someone in a key role.  Even if the backfill has been identified, leadership knows that time may not be an ally.  Talented new hires take time to ramp up, acculturate and build relationships.  Bringing someone new on to a team is not easy – it takes time, effort and may create delays which are costly.

During our “Emerging Talent Leaders Intensive” at the University of California Berkeley Extension, we asked these aspiring HR leaders about the downside of corporate latency.  Their insights further highlight the importance of this topic:

  • Customer Impact – Customers are impacted by employees who shouldn’t be in their jobs.  Poor or non-existent service, negative reflection on an organization’s brand, or increased prices (due to lack of required productivity) all directly impact customers. Obvious impact runs the gamut from front line servers delivering memorable service (or not) to the not necessarily seen yet felt need to add production workers to one’s manufacturing line when others fail to perform (increasing costs) impact customers.
  • Reduction in team productivity – A colleague of mine delivered beer to pay for his college tuition.  His full time, year-round co-workers took him out back one day “explaining” their beef.  “You’re working too hard man.  You’re making us look bad.  This is no summer job for us, tone it down.” Sometimes peer pressure is direct, in other circumstances subtlety reigns. 
  • Motivate star performers to leave – Devoted employees want to work with similarly motivated people.  They want to be recognized for their contributions, earn bonuses, achieve promotions, make an impact.  The bad apple theory (one bad apple can spoil the whole bunch) can drive someone eager to make their mark leave your organization. This has costs well beyond the immediate need to replace – this can reset morale, engagement and loyalty throughout the team.
  • Pace of change forces people issues to the back of the agenda – Everyone is busy.  There isn’t a person I’ve spoken to in the past twelve months who doesn’t report having more on their plates, shorter delivery timetables and increased expectations for delivery.  Like most of us, we deal with the emergency, the fire, the most immediate issue, here and now. We’ll get to it … isn’t just a quip or excuse – it is a reality.

Does management really “look the other way”?  Is wait and see a viable approach?

Research tells us we should expect latent action.  Managing people is hard and many aren’t good at it.  A 2015 Gallup research report should serve as HR’s shot across the bow.  The title read: “Only One in 10 People Possess the Talent to Manage”. Mic drop – just let that sink in!  One other report tidbit is worth repeating: “Talent is the stabilizer:  It paves the way for consistently excellent performance.”  So, managers, leaders and HR professionals alike – heed the warning!  Failing to address those who need to go, has real economic impact.

This issue needs to become front and center for all of us in HR.  People ARE our business.  Employees count on us to represent them.  Our employers expect us to enable their success.  We’re in the direct line of fire, action or inactivity.  We can and should raise the bar, addressing obvious cases of corporate latency.  We may not own final decision making, yet we can shed light on the importance of taking appropriate action, in a timely manner.  

Begin with critical conversations about known cases.  Let’s lead here – our organizations need our direction, leadership and support.   

I welcome your comments, questions and alternative positions.

Look for Part Three of our series in two weeks:  Transparency – When is information enough?