Friday, October 30, 2015

The Consequences of Keeping Bad Employees

Most people do their jobs well, but there are some who can’t or won’t do their jobs adequately. The most obvious consequence of keeping bad employees is that paying them is a waste. But there are follow on effects that are much more serious. In the private sector, these problems tend to take care of themselves, but not so in the public sector.

There are many problems that come from allowing bad employees to stay in an organization:

1. They cost money but don’t produce their share of output.

2. They take up the time of other employees.

3. Some talented employees will become disgusted with having to work with incompetent employees and will leave.

4. Over time some bad employees will move up in management where they can cause more damage with poor leadership and bad hiring decisions.

5. An organization that goes too long without culling bad employees will eventually lose its ability to distinguish between weak and strong performers.

Of all these problems, only the first one (not producing enough output) has much of a hope of ever being measured. But the other four problems have a significant multiplying effect that is very difficult to measure.

Most companies in the private sector do a reasonable job of culling bad employees. The ones that fail at this important task increase their risk of failing entirely. So, one way or another, the problem of bad employees tends to be kept under control. It’s not that the private sector employees are all star performer, but the proportion of poor employees tends to stay under control.

It’s worth noting that a person is rarely inherently a bad employee. It matters a great deal what job they’re expected to do. There are some jobs I’m terrible at, and others I’m good at. The process of culling poor employees is in some sense a force that shuffles people out of jobs not suitable for them and into jobs they’re better at.

This reshuffling of people to different jobs sometimes happens within an organization and sometimes it involves getting fired and looking for a new job. It’s tempting to eliminate firing altogether and say that companies should always find a better fit for each employee. However, without the threat of getting fired, some employees will see no reason to ever really try. Some bad employees can’t do their jobs, but others just won’t do their jobs without the threat of being fired for poor performance.

In the public sector, firing employees is much less common than it is in the private sector. This leads to some very simple logic. Some hiring decisions are mistakes. If you don’t get rid of poor employees, they accumulate. This leads to the five problems listed earlier.

According to Statistic Canada, in 2011 there were 3.6 million public sector employees paid a total of $194 billion. If we conservatively estimate that 10% of these wages are wasted on bad employees, that’s $19 billion per year wasted. Of course, bad employees pay taxes, so let’s call the net waste $12 billion per year.

According to CRA, in 2012 the 9.5 million Canadians earning less than $20,000 per year paid a total of $1 billion in federal and provincial income taxes. So, cutting public sector waste would allow us to stop taxing people with incomes under $20,000 and we’d still have $11 billion left over. Just think of how much we could shorten wait times for medical scans and procedures.

Some readers will take this article as an attack on public employees and the services they perform for Canadians. This is not an attack on Canada’s public service. Our public service is vital. We need safe food and medical care just to pick two important functions. We need the millions of public servants who do their jobs well. What we don’t need is to pay the ones who can’t or won’t do their jobs. Many strong public servants would be thrilled to see their useless coworkers leave.

Don’t be fooled into treating public sector employees as a uniform group. There are good teachers and bad teachers. The good teachers are worth every penny we pay them and the bad teachers do damage to our pocketbooks and our children’s future. It’s not realistic to expect to eliminate all bad employees, but it would be great to deal with the most obvious cases of poor performance.

10 comments:

  1. "... Many strong public servants would be thrilled to see their useless coworkers leave. ..."

    Agreed, but at the end of it, the Public Service Unions will continue to fight any and all attempts to get folks in the right jobs will be fought forever. In many instances you simply have folks who are in the wrong job, but are petrified to say anything about it for fear of "being found out".

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    1. @Big Cajun Man: It's very true that there are huge forces lined up against any improvement.

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  2. Also, I think there's an OB component which is a mix of 3 and 5, where bad employees will instill in new employees (either through explicit directions or simply by leading by example) the amount of work that should be done (little to none). There's a snowball effect where the more employees adhere to such behaviors, the more a company culture is created. The link with number 3 is that, instead of quitting, the good employees will stay with the organization, but produce the output of the bad employee. Thus the snowball...

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    1. @Lowgenes: Interesting. It makes sense that you want the right people to be leading by example.

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  3. I can comment first-hand about being a (provincial) public sector employee.
    In the last ten years I've witnessed some abhorrent behaviour from both civil servants and politicians; what you see in the news is maybe half the bad behaviour.

    In my immediate department about 1/3 of the staff function at the lowest level possible and usually below 'job description'. They are a problem, however, the even larger problem is that the management have fully acknowledged the problem employees, for years, but they themselves don't want to go through all the hassle to get them fired. Now we have bad employees and bad management. As mentioned, the structure of the public service is a big part of the problem. It's astounding the level of non-accountability that pervades the public service (more so in political enclaves).

    Unfortunately, the result of the above situation causes two reactions: 1) good workers will quickly leave public service back into the private sector, or as in my case 2) good workers will realize that there is zero incentive to function at a level greater than the lowest level currently being accepted (LCD), thus begins a slow grind to the bottom. Now you know why everything in the government takes 4-6 weeks.

    I have a lot of free time at work now that I don't work hard...I mean hardly work...what's the joke? ;)

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    1. @SST: I've talked to many workers in the public sector about their work environments and they all seem to have stories of such problems to varying degrees. I'd really like some sort of solution, but no politician would touch this with a 10-foot pole.

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    2. Unless your name is Tim Houdak. Look what trying to implement a change got him. I would like to see the playing field between public and private leveled. I believe the OPP that ms wynne is trying to implement was her way of saying let's not take away from the public employees but raise the level of retirement for all. Unfortunately she doesn't address the negative effects that not actually fixing one problem while creating new ones causes.

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  4. Observing from my lowly level, it's a problem of not just accountability but accountability with consequence. There's really no reason why a public entity can't be managed or operated with private sector mindset. Which runs directly in opposition to an already mentioned malignancy -- unions. The largest function of a union is grand inefficiency, creating unhealthy distortions both localized and in the market place.

    Politicians and public employees will most certainly never push the boundaries of innovation; they love low-quality status quo for a reason. What really boggles me is with all the highly successful business and management models which drive the private sector, why government is so achingly slow (or outright refusing) to adopt and adapt such available practices.

    At times it seems like terrorist cell groups are better organized and functioning than the too-many tentacled bloat that is public service. It's been this way for a few thousand years already, so I can't see it changing any time soon.

    (As a funny/sad side note, for one year I worked with an ex-Fed employee and every day he would tell me a different story of gov't horror. I heard over 200 real-life 'Office Space' head-shakers.)

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    1. @SST: I think we need to be careful here to keep the discussion balanced. Unions do some good work to protect their members rights. However, they also protect people who deserve to lose their jobs. I'd like to focus on changing only the things needed to improve productivity.

      I've lived through many management model fads. Some had some substance and others didn't. One common attribute is that none work without a competent and motivated work force.

      I can understand getting frustrated but please let's not compare the public service to terrorists. Regardless of the point you intended to make, this is far too inflammatory.

      Sadly, I've heard many head-shakers from family and friends working in various types of public service.

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  5. Fair enough, that was perhaps an overblown statement.

    I will say that for an operational entity of that size -- 257,000, Canada's largest employer -- the Federal government does a not bad job of keeping things going. Not a good job, just not bad. An innocuous government is better than the alternatives.

    It has also been "in business" for more than 150 years and survived it all. As well, unlike a corporation with a singular focus, government has to do it all and serves many, many masters. Think of a single proprietor operation who has to work every aspect of the business, some will be successful, others will struggle.

    Anyone know if there is a post-secondary degree offered with a focus on management/mngmt structure within government (as opposed to an MBA etc)?

    On unions, we will simply have to agree to disagree. Unions are long outdated; unhealthily morphed from a necessity into an ideology. Again, it's the structure of the beast which needs to be changed, but, as above, trying to change a cultural ideology is staggeringly difficult. The private sector is ~16% unionized and declining; the public sector is ~71% unionized and increasing. That should tell you a lot about a lot.

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