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Do you need term limits for your employees?

Term Limits for Employees

Many elected politicians have term limits because they tend to get stale in their position and it is important that the incumbent brings new ideas and energy to the position. Moreover, it is very difficult to defeat an incumbent, and sometimes forcing them to stand down is what is in the best interest of the electorate.

The same is true of employees. They tend to get stale in a position, stop bringing new ideas or challenging the status quo. They may create a “dead man’s shoes” environment by standing in the way of more competent people, and forcing them to stand down may be in the best interests of the company.

Obviously this is said somewhat tongue-in-cheek, but there are some serious grains of truth contained within the concept. My experience is that when you start a company, you really value long-term employees. If that company grows and changes, then you frequently outgrow your original employees and yet you leave them in place because they are somehow part of the culture and what you think is the fabric of the organization.

In the new economy, this kind of thinking simply cannot be allowed and it is important to make an objective evaluation of your employees, their contribution and their specific value to the organization today. This has to be based on what they do today and not on their history, and it can be a difficult exercise.

The problem is this. At some point you outgrow them and there is no obvious mechanism to identify when that point occurs. Time is like a river that has no deadline. The boat keeps going with the current, and there’s nothing to stop the momentum. You keep floating downstream with the people on the boat and as long as the status quo remains (sales, profits, employee stability) there’s no obvious external mechanism to make you review it.

What happened to me was that I had two key employees who were with me for 10 years. They both left within a week of each other and both started competing with me. When I look back on it I realize that my issues with them were that they had not, in my opinion, risen to the level of performance that I needed. I imagine that their issues with me were that I was no longer treating them with the respect that they felt they deserved, and they took matters into their own hands.

In each case, I should have reviewed them differently and there are three techniques I have developed as a result of what happened that you can use to implement this thinking:

360 Review This operates from the principle that at specific points in people's employment you need to review them from a different perspective. This will be different for each different set of circumstances, and it may be that you decide that you want to do it at the five-year mark and then every two years afterwards. The review incorporates a look at the job, the abilities of the individual and the potential that you see for advancement. The intention is to decide whether you are still getting value for money from the employee.

Would I Hire You Review In this exercise, the employer looks at the incumbent’s position as if they were interviewing for their job. If they were a new applicant, the questions would be whether they had the experience and talent and whether they were worth what you would have to pay them. As the incumbent they obviously have the experience. The question is whether they have the talent and whether they are worth the money. This exercise can be done by you without reference to them or in conjunction with them.

The Job Re-Interview If you are going to include them in the process, you could also consider making them “re-interview” for their job in a mock setting. This may sound a little odd and perhaps even confrontational. It needn’t be that way and you’ll be amazed what you learn from your employees about their lives, hopes and dreams….and their applicability for their current job function.     

When you go through the Term Limits exercise you will learn some disturbing things. You will find that you have issues that should be addressed and employees that are being overpaid. Many employers decide not to go through the exercise because they aren’t ready to act on the information, but here’s the thing.

You don’t have to act on it anytime soon…not ever if you don’t want. All that matters is that you have the information….that you know what is really the case. Sooner or later you will develop the intestinal fortitude to do something about it, and the longer you have been aware of it at a conscious level, the easier it is to act on the information when the situation finally explodes.

Which it will if you don’t act!