Working for Lloyds Banking Group just got a whole lot more stressful. The bank has warned that employees deemed to be “underperforming” could lose their jobs, with 3,000 staffers judged to be among the bottom 5 per cent at risk.
The company said this “performance management measure” is part of its plan to create a “high-performance culture” – one that could be used to select staff for dismissal. But this is not about reducing the 63,000-strong headcount – it’s pour encourager les autres.
At issue is employee churn, or rather the lack of it. The chancellor’s attempt to plug a hole in the public finances by taxing employment – she claims this is not a tax on “working people”, but clearly it is – has led to rising unemployment, and people sticking to their jobs like limpets.
When the economy is shaky, is it any wonder that staffers are sitting tight? Trouble is, too little staff turnover means you can’t bring in bright, ambitious newbies to add dynamism and drive the business forward. So Lloyds boss Charlie Nunn has decided to create some turnover of his own by cutting out those whose numbers don’t add up.
It’s been done before. The late Jack Welch infamously advocated a far harsher version of the Lloyds plan when he was the boss of General Electric, or GE, the US conglomerate. He held that you should be firing the bottom 10 per cent of managers every year. I recall a former boss of mine, as tough and demanding a manager as I’ve ever worked for, wondering why anyone would want to work at the place. Being employed at Welch’s GE must have been the recipe for an ulcer.
However, versions of Welch’s ideas have survived him. Nunn earned his spurs at McKinsey, the management consultant, another famously tough but also high-reward place to work, where “up or out” – whereby the employee either gets promoted within a set timeframe or is fired – might once have been standard practice.
But these days, there’s Glassdoor. Online reviews and ratings of companies are obviously not scientific by the standards of a market researcher or a pollster, but employees, and potential employees, take notice of the careers site. When I last looked, Lloyd’s boasted a “would recommend working here to a friend” score of just 65 per cent; by contrast, HSBC was on 74 per cent and Barclays scored 79 per cent. By these metrics, shouldn’t Lloyds be on a “performance improvement plan” as an employer?
Of course, none of those rivals are renowned as cuddly employers. Banking is a highly competitive sector, and its constituents can’t afford to stand still or carry passengers, not when they also have an aggressive group of young and hungry fintech companies (Monzo etc) stealing their customers and changing the way banks do business.
But perhaps Charlie Nunn should still have a care. Just as too little employee churn can create problems for a business, so can too much. The labour market is in a trough at the moment, but we’re not long removed from a situation where there were more vacancies than workers available to fill them. Rachel Reeves’s tax on jobs put the kibosh on that – but if the economy ever stops “underperforming”, the jobs market will soon adjust.
