I’m sorry to say that during my short tenure working in the IT department at AMD long ago, I learned much more about what NOT to do than what to do when it came to managing people.
Soon after I arrived, I began accumulating responsibilities and staff. At one point, I had nineteen direct reports (way too many for a single manager), split between Austin, Texas, and Sunnyvale, California.
One of those employees was clearly not carrying her weight in the organization. I began to hear reports that she was getting other employees to do her job and was accomplishing about half as much as any other person in the group. I tried to work with her and sent her for additional training, but the problem didn’t improve.
I kept my boss informed all along the way and was ready to terminate the employee. When I mentioned this to my boss, he told me that she would first have to be put on a performance improvement plan for a quarter before we could get rid of her. I thought this was likely a waste of time but complied with my boss’s instructions.
One month into the plan the employee approached me and told me she had found another job and would be leaving in two weeks. It was all I could do not to cheer when I got the news. I thanked her for providing notice and went running across the campus to give my boss the update.
But when I told him the news, he didn’t seem to be as excited as I was. In the moment, I just figured he was busy and I left to celebrate my good fortune. Imagine my shock the next day when I found out that my boss had gone directly to the employee and made a counteroffer. The counter included a significant increase in salary!
After a couple of days the employee decided not to take the counteroffer and still leave AMD - but not before she told everyone in the group about how much she had been offered to stay. Needless to say, that left me with a morale problem of epic proportions. How was I supposed to explain why my boss thought the worst performer in the group should be the highest-paid member of the team?
The Cost of Keeping Poor Performers
Some leaders, including CEOs, believe that every employee can be saved, possibly because firing someone would require them to admit they made a mistake in the first place. The result is that they fail to save their top performers, who don’t want to work with poor performers.
On the opposite end of the spectrum, though, are leaders who tolerate no deviation. The second those employees don’t offer consistent performance the leader boots them out the door. These CEOs care so little about employees, they make layoffs their first course of action at the slightest sign of financial struggle.
You must ensure you’re not doing what my boss at AMD did, and what is surprisingly common: going out of your way to retain mediocre employees.
Neither approach works. The first kills your organization slowly. The second kills morale and trust immediately
Human talent is highly variable and highly context-specific. Someone who thrives in one role or company can struggle mightily in another. A brilliant engineer might be a terrible manager. A top performer at a startup might flounder at a large enterprise. The CEO’s job is to understand these dynamics and then allocate talent appropriately across the organization. As you do this, you must ensure you’re not doing what my boss at AMD did, and what is surprisingly common: going out of your way to retain mediocre employees.
That means three things:
First, hang on to your A-players.
These are the people who consistently exceed expectations, raise the performance of those around them, and drive real value. Losing an A-player because you tolerated C-level performance destroys morale and productivity in ways that compound over time. Your best people have options. They will leave if they’re forced to carry dead weight.
Second, build systems where B-players can contribute fully and potentially become A’s.
Most of your organization will be solid B performers, and that’s fine. These people do good work in the right environment. Your job is to create that environment: clear expectations, proper training, the right tools, and roles that match their strengths. A B-player in the wrong role becomes a C-player. A B-player in the right role with good management can become an A.
Third, move C-players out after giving them a chance to improve.
This is where most CEOs fail. They either give up too quickly or hang on too long. The right approach is to provide honest feedback, specific training, and a clear performance plan. If the person can’t or won’t improve after a genuine effort to help them succeed, you have to make a change. Not out of cruelty, but out of responsibility to everyone else in the organization.
Keeping a poor performer costs you far more than their salary. It costs you the productivity of everyone who has to work around them.
Your organization’s performance is the sum of its people. Get the people decisions right, and almost everything else becomes easier.