Cargo Cults And Management Practice

During World War II, US forces took over islands in the Pacific where the residents had never see airplanes, or canned food, or any of the tons of material that a military force needs. The islanders were careful observers, though, and they figured out what the military did to cause the goods to show up.

This is what they saw. The military folks would go up into towers they'd built and talk into a box. Soon the material, or "cargo," would arrive.

When the war ended, the military went away and the cargo stopped coming. But some of the islanders figured that they could make the cargo come back. All they had to do was exactly what the US military people had done.

So they went up in the abandoned towers and talked into the dead radios that were there. Sometimes they "built" radios from wood or other available materials. They did everything just like the military and they waited for cargo to arrive, but it never did.

Those islanders were members of something we call "cargo cults." They were bright, observant people who copied a behavior they believed would bring back the cargo. It seems silly to us, because we understand what airplanes and control towers and radios are.

But it was magic to the cargo cultists and they tried the best they could to make it work. Just like lots of managers do with the practices of other companies.

Everybody, it seems, copies General Electric (GE), often in the area of forced ranking. At GE, managers are required to rank their employees into three groups. Twenty percent should be top performers. Seventy percent are in the middle. And 10 percent bring up the rear.

The idea is that you treat the top 20 percent as stars and they get the lion's share of the bonuses, stock options and rewards and opportunities of all kinds. You work to keep the middle 70 percent engaged. And the bottom 10 percent have to go.

This system works at GE, much to the chagrin of many commentators. Because it works at GE and because GE has been a successful corporation for decades, some businesspeople decide to introduce forced ranking in some form into their organization. They want to get some of that GE magic.

The science fiction writer Arthur C. Clarke has said that "Any sufficiently advanced technology will be perceived as magic." When you don't understand what goes behind the success of the forced ranking system at GE, it looks magical, and magic always looks better than hard work.

So companies adopt the forced ranking system without paying attention to any evidence about how it might work in their place. But, alas, there is evidence that forced ranking is more likely to create problems than to magically create profit.

The Novations Group surveyed two hundred human resource professionals who worked at companies with more than 2500 employees and asked them about how forced ranking worked. Half of the companies used some kind of forced ranking system. Respondents to Novations' survey found that forced ranking caused lower productivity, lower levels of employee engagement, and increased distrust of leadership.

If you're going to adopt the practices used by another company, no matter how successful, you need to do some research into why it works there. In GE's case, the answer may involve things you can't replicate overnight.

Forced ranking works at GE because there are two characteristics of the company that support it. First, there is a culture of candor. Unlike most other companies, GE values and rewards candid conversations about performance.

GE also has used an extensive and rigorous evaluation system for years. Combine candid communication with rigorous evaluation and you get evaluations that don’t come as a surprise. In other words, people know when they're not performing and don't fit.

There's one other thing. Despite the rhetoric, GE doesn't automatically fire people who are in the bottom ten percent. There's often the opportunity to improve or try a different assignment before firing becomes the option.

If you want to adopt the practices of another company or industry you have two choices. You can do it like the cargo cults, mimicking behavior and hoping it will get the same result. Or you can do a little due diligence and increase the odds that you'll make the right choice.

Do a little research. Academics, consultants and graduate students are doing research all the time about what works and what doesn't. If you read the Novations' study as part of your due diligence, you'd know that forced ranking isn't the magic it might appear.

Check out the companies where the practice works and a few where it hasn't worked. What are the differences between them? Which companies are like your company?

If you're still not sure about adopting a practice, review the history of how it came to work in companies where it's successful. Tracing that history will often help you see organizational and cultural pre-cursors necessary for success.

In this age of management fads, it's easy to take a cargo cult approach to adopting some new practice. But with a little bit of work and research you can choose wisely which practices you'll adopt and how you'll adapt them to your own company.