Johnson & Johnson announced that they won't give full bonuses to
employees who, according to their guidelines, otherwise deserve them.
Why? Because J&J had about the worst year ever. Not in terms of
sales - sales have actually been OK - but in terms of horrendous
quality and safety issues that threaten to destroy what had been one of
the most vaunted brands in the world. Just last week, over 40 million
products recalled. And that, coming on the heels of 288 million items
recalled during 2010. It's not about one plant or one region or one
product line - quality control problems are pervasive throughout the
$62B firm. They've alone caused the greatest boom in generic brand
sales that the marketplace has seen.
So should a J&J Sales
Manager, who met all his goals, suffer? Should a Director of HR, who's
worked diligently to achieve results tied to engagement or attrition, be
denied what he thought was a commitment on the part of the company?
Should that Finance VP, whose team delivered analytics on time and
accurately all year, be denied the money she was promised? Of course!
A
situation like this shines a spotlight on how outdated and
counter-productive our traditional approach to performance management
and employee reviews has been. How well an employee is "scored" may
have very little - or nothing - to do with the overall health of the
company. And large organizations like J&J may be regularly
rewarding large groups of employees whose goals have nothing to do with
the business strategy - or what is in the best interests of
shareholders. As long as bosses don't give honest feedback to their
employees, performance review and bonus goals will remain nebulous,
obvious, easy. And employees will nail them.
J&J has awarded
it's staff 100% or more of their bonuses over the past two years.
This, during a time when pervasive quality issues were identified, when
consumer complaints when unanswered, and when the FDA concluded that
internal quality investigations were "unjustifiably delayed and
terminated prematurely." During those two years, leaders who had a hand
in these shenanigans got paid bank. And only now are their actions
coming to light. And only now are they being hit in the pocketbook.
I
applaud J&J for making taking what seems like an obvious step. And
sadly, it's a gutsy one. Now let's see if they blow up their entire
merit system because they're already spent years rewarding the people
who created the mess.
http://nyti.ms/gE04Yx
http://on.wsj.com/hpl5fj