Are Some of Your Employees in the Parking Lot?

Last month we discussed the Gallery Owner’s Dilemma and observed that a gallery is likely to be full of art pieces that nobody wants if the owner does not take active steps to move them out when they don’t sell. Likewise, we observed, a manager of a department is likely to be stuck with people that nobody else wants if the manager does not take some active steps. What are the manager’s options?

We offer a provocative option this month, called the Parking Lot exercise.

Let’s say you are a manager with ten direct reports. Imagine that you could let your entire team go, and they are in the parking lot. Imagine that, just as magically, you had recruiting efforts underway for the ten open positions, for which you have received numerous applications, including from the ten colleagues in the parking lot. Which of the ten would you hire back from the parking lot? What should you do with the remaining colleagues still standing in the parking lot in this thought experiment? In essence, you have concluded that if you were to reconstitute your team, it would not include those people in the parking lot.

Here is what we suggest you do: Have a candid conversation with each of the individuals in the parking lot.

Tell them that you conducted this thought experiment and they were left standing in the parking lot. Tell them why you came to that conclusion and what they need to be doing here forth so that you would not come to the same conclusion the next time. Emphasize the fact that you are NOT firing the individual, but make it clear that if you were to reconstitute your team, that individual wouldn’t be on it.

Is this brutal or compassionate?

If indeed, as was assumed, certain members of your team are in the parking lot, is it not in everybody’s interest that they know that? “I would have communicated that during the performance review,” you argue. How many performance reviews clearly tell the subject that they are in the parking lot – i.e., if you were to reconstitute your team the subject is not on it?

The clarity of the parking lot communication puts a level of responsibility on both the manager and the employee. Clearly the employee has been fore warned. But the manager too undertakes a responsibility of bringing the issue to a head within a specified time frame. That is, the manager informing the employee is akin to the gallery owner putting a sticky-note on the back of the artwork reminding the owner when the artwork should be discounted or scrapped.

This practice was implemented in a 500-1000 employee company for five years during which its revenue grew from $100M to $250M.

All employees were subjected to it, including the CEO. Each manager was required to communicate to his or her employees, during each annual performance review, as to whether the employee was in the parking lot or not – with a clear Yea/Nay response. Even the Board of Directors communicated the same to the CEO. During those five years there were, at any instant, 18-22% of employees that had been told they were in the parking lot. The consequence of being in the parking lot was – in addition to being on a performance improvement plan – ineligibility to receive stock options. By and large, managers, employees and the company found the practice to be intellectually honest – even if brutally so, at times. Feel free to contact us if you would like more information on its implementation.

Food for Thought is our way of sharing interesting concepts on corporate leadership and management with others who might find it useful. The thoughts offered are intended to be controversial and thought provoking. They are intended to help our readers intentionally realize their potential, what we call Potentionality.