![]() The global DEI market was estimated at $7.5 billion in 2020, and is expected to reach $17.2 billion by 2027, according to a recent report published by Global Industry Analysts. Subscribe to my quarterly newsletter, and check out my book, The Feel Of The Deal How I Built A Company Through Acquisitions.He business of diversity, equity and inclusion (DEI) is booming. ![]() They then must reward the high performers and get the low performers to improve or leave. Mid-market company leaders must unfailingly evaluate people based on clear criteria. From what I read, at Microsoft the blame may fall more on the absence of clear, accepted, visible criteria. Stack ranking is at its heart, an ordering of items, based on a set of criteria. It forced a harder comparative look, and drove better decision-making. I would often force them to stack rank their team, then based on that, try and justify the pay levels of each person. In my own company (I was CEO for 23 years), executives would at times want to give equal raises to their whole team. It forces inquiry about performance and using evaluation tools like 360-degree performance reviews. In these cases, I will occasionally force a CEO to stack rank his leadership team. In my consulting work, I have some CEOs who like everyone in their leadership team and rarely reprimand or fire poor-performing leaders. If management keeps its own house in order, it will greatly increase the odds for building a great performance environment that attracts and keeps the best talent. In turn, they will have a similar caliber of vice presidents and other managers below them. In the end, a CEO who is doing her job will set the example for her management team: that high performance - not politics - is elemental. ![]() They have less need for big-company, machine-like systems that are overly rigid. Because they are much smaller than Microsoft, these companies typically have only 2-4 layers of management. So what can middle market companies learn from Microsoft? What these companies need is a firmer, more formal approach to identifying high and low performers, and must treat each appropriately. But I’m inclined to fault the measurement system more than stack ranking. Performance is bound to suffer.įrom the posts I read, the stack ranking at Microsoft is political and not based on valid accepted metrics that define performance. The path to winning becomes political-to make friends with the right people. The reason is that it’s not clear to them what they must do to be successful. Further, if the metrics for performance aren’t understood and accepted by all, the environment will suffer badly and great people will leave. A company that applies too much pressure will lose good people. Likewise, CEOs dedicated to high-performance results should avoid hiring these people. They should not work for any firm that strives for a high-performance work environment. This will seem harsh to people who don’t want to continuously improve themselves. With the lowest performers gone or improved, new people-who used to be average performers-are now on the low end of the scale, and are encouraged to perform at still higher levels. But the company is left with higher average performers and a tighter range. Those who don’t respond well and get fired or quit don’t feel great about their ex-company, and they might write disparaging comments about it. This nudges them to perform at higher levels or encourages them to leave. They get counseling, encouragement, and tough evaluations. In a high-performance environment, the lowest performers are made to feel uncomfortable. Much research has been done in this area by Elkiem, a human high performance research firm with which I’m quite familiar. The range between the gold medal and no medal at the Olympics is very small, and we see amazing performance. For example, Olympic athletes compete to be the best in the world. A tight range produces higher performance. One key to increasing performance is to reduce the range between the lowest and highest performers in a given population. The high performers either leave - they prefer working with other high performers - or become arrogant and hard to manage. These low performers destroy the performance environment by encouraging average performers to slack off. In these companies, I most often see the exact opposite problem that’s purportedly plaguing Microsoft: Employees (including management) aren’t evaluated with sufficient rigor, and low performers are tolerated. ![]() My experience has been with middle market companies ($10 million to $300 million revenues), which are many-fold smaller than Microsoft.
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