As Published in Business 2 Business, February 2003

The Halo Effect:
Here's a widely used ineffective and costly technique for postponing the inevitable
By Ira S. Wolfe

The termination and subsequent replacement of any employee is painful. And the retention of an under-performing manager, especially a senior manager, is like self-inflicting a wound. There is never a good time and it is always more expensive.

Everything we do anymore needs to be done yesterday. The problem solving requirements for managers today are many times filled with ambiguity. There are so many more questions being asked than any one person has the resources to answer. Even when the answers are available, who has enough time to get them?

This is a just-in-time world. Every project is a rush and we never have enough time to accomplish everything that we want to do anymore. Deadlines are always too close to the start of every project and there is an endless flood of new projects starting. Today's managers and leaders need to be making more and more effective decisions without always have all the information they need and the time they want.

To compound the complexity of being an executive or manager today, these senior and middle-level positions are more people-oriented than the jobs that these same individuals held in their old technical jobs. Managing people requires a skills set and a mindset beyond the demands of doing a job and managing a project.

The rationale for keeping the mediocre manager is more related to good timing and much less related to performance. For instance, the under-performing manager is the key contact in a crucial negotiation with a vendor or customer. How would it look if you terminated him before the deal was closed? Or his assistant will be on maternity leave for three months, and who would take his place? You rationalize that it is better to keep this employee for the time being and create too many waves. You say to yourself, "I'll just keep an eye on him."

(You do, however, instruct the other members of your executive team to keep their eyes and ears open. If they hear about anyone looking for a change to let you know. But no one does. Who wants to rat out their colleague? Could the same thing happen to them at a later time?)

Here is another favorite. "We know that we need to make a change but our documentation isn't very good. We're really going to hold his feet to the fire now and document every little instance. One wrong move and he's gone. Maybe he'll quit." Opps. They never quit soon enough, do they? This strategy may justify the termination battle but if they hold out longer than you do, watch for the discrimination or hostile environment claims!

Keeping a close watch on Scott soon transitions into "I hope he doesn't screw up because we don't have the time to deal with a personnel change right now."

Unfortunately, for the barely qualified in an increasingly complex and dynamic world, the requirements of nearly every job are becoming too big and too complicated for many individuals to do by themselves. But doing the job the way the job has always been done is the only way they know how to do it. They have no time to learn and no experience in dealing with many of the challenges confronting them, so they handle it the way they always handled problems, conflict and change - with old solutions or avoidance. They would never ask for help. If they did, others might think, "Why is he asking us? Isn't that what we're paying him for?"

Still another performance problem surfaced. Multi-tasking. Scott was exceptional at multi-tasking or as he claimed, juggling many balls at the same time. His performance reviews "confirmed" it. He was "good at multi-tasking". He had dozens of projects going on all the time.

What supervisors fail to report is that some managers rarely, or ever, or meet deadlines or completions without error or omissions. Many can't even locate all of their data in "vertical piling systems." This formerly forgivable performance issue came to a head when not only did revenues fall. Everyone is entitled to a few mistakes, aren't they? With lots of money coming in, missed budget items were a mere inconvenience. With less money today, it's a crisis.

Oh yes, that brings up another un-competency that was tolerated. Computer literacy. Who had the time to learn how to use the computer? So under the guise of "checking" computer generated figures, time is lost, work duplicated, trends overlooked, and important quantitative analysis left undone.

Eventually time runs out. When a manager is a mere worker in a leader's position, neither his executive team nor his board of directors have any clue about potential unfavorable future trends. Unwillingness and maybe an inability to grow skills to meet the requirements of a job today will cost the manager a job. But those mediocre skills and performance affect many more lives.

Colleagues will suffer salary cuts. A few dozen employees will be out of work. Many of these employees have families. Morale drops, and who knows how much productivity will be lost, not to overlook employees who may jump ship for the competition.

Construction projects get postponed. The contractors have employees, and these employees may be laid off. Vendors will be asked to extend payments. The vendors have employees too.

Many people overseeing a manager's actions also fail to take action at the appropriate time because they were blinded by the "halo". Unfortunately, the "halo" effect will cost this organization hundreds if not thousands of dollars. Because a manager's performance was recently deemed to be "satisfactory" according to his performance reviews on record, his dismissal will be costly. He can be terminated "at-will" but poor or non-performance will be particularly hard to defend when he files a discrimination claim. Yes, he is in the protected class and his files show a long-term employee with satisfactory performance.

Beyond the costs of severance pay and the recruitment of a replacement, the organization will incur the cost of transferring Scott's knowledge to his replacement, if that's possible, and much knowledge will never be captured. The cost of lost productivity and opportunity during the transition can't be overlooked either.

Needless to say to anyone who has ever terminated an employee for poor performance after postponing this difficult decision for any period of time, the likelihood of finding other mistakes after Scott leaves is very good. Who knows what stones this organization will overturn?

In addition to a halo managers's costs, the organization should expect lost productivity from a dip in morale by other employees. (Trust me on this one. Few companies have successfully laid off employees without other employees asking, "am I next?".) Recent studies have shown that organizations that retain employees during hard times always have more consistent, stronger long-term financial performance than those who cost-cut with people.

Second, income will be lost from the delay of new services. Third, interest expense will increase by extending payments, losing discounts and tapping into the credit line. Fourth, when the crunch is over and the organization is back on track, additional costs will be incurred when the organization needs to re-hire employees. And so on and so on.

Who is responsible and accountable for this - Scott or Scott's managers? In retrospect, everyone now realizes that Scott was not the leader nor manager they needed for years. It was just never the right time to dismiss him or change his responsibilities. Now was not the right time either. But now there is no other choice.

How ready is your management and leadership team to face new challenges you've never faced before?

This begs the question: How ready are you as the leader to make necessary personnel changes? How do you draw the line between "giving an employee time to improve" and "procrastinating the inevitable"? How defensible is your documentation if you do need to make changes? How willing are you to make the difficult personnel decisions to ensure the long-term stability and strength of your organization? When is "this isn't the right time" a justifiable excuse to retain employees who won't or can't meet their responsibilities? How many lives and how many projects does an under-performing manager need to affect before it is justifiable to remove him from his position?

If you are not prepared to answer these questions nor act now, how effective a leader are you?

The rules for engagement have changed. Consider these four conditions when evaluating the performance of your sales, management and leadership teams.

1. There is never a good time to terminate an employee. It's either not a good time for you or a good time for the employee.
2. Job requirements have changed. Years of experience haven't prepared many employees to meet today's on-the-job challenges.
3. Many employees just don't have the abilities and motivation to do today's jobs. Some can be trained, coached, and developed. Some can't. Organizations cannot afford to train, coach, develop and retain employees who are miscast for the job.
4. There is no GOOD reason, just lots of excuses, for retaining an employee who can't meet the changing demands and priorities of today's job that they were hired to do. Paying less for less talent lowers cost, it doesn't improve productivity.

The cost of halo performance reviews is far-reaching and expensive. Our world is truly connected today.

Ira S. Wolfe is founder of Success Performance Solutions. He is the developer of CriteriaOne™, the Whole Person Approach to matching, managing and motivating employees. He will be a featured presenter at the 2003 International Builders' Show (NAHB) in January. To subscribe to his free weekly e- newsletter The Total View or monthly newsletter Labor Storm Alert email iwolfe@super-solutions.com. For more information about CriteriaOne or Managing to Excel, contact Ira at 717.656.4632, email him at iwolfe@super-solutions.com.