Monday, April 24, 2017

Rejuvenescimento

I once worked for a company that had Latin American affiliates.  One of those affiliates had a practice called  Rejuvenescimento.  That is, Rejuvenation.

The practice was very simple.  They fired 10% of their workforce every year.  Each level had a 10% levy.  My boss, who had spent time with that affiliate, claimed it was extremely motivating.  You did not want to be in that bottom 10%.  Heck, you did not want to be in the bottom 30% due to measurement errors.

Another advantage was that it created upward mobility for skilled people in the lower ranks.  It was guaranteed that the best-and-the-brightest would have promotional opportunities every year.  It created quite an up-draft and, consequently, promising employees did not need to leave the firm to seek advancement.

A final advantage was that it enables a flat organization structure.  For example, a "span" of ten means that a firm of 1000 employees only needs three levels.  A "span" of three would drive six levels.  As firms age the "span" often shrinks, especially at the higher levels.  Rejuvenation provides a solution to the executive who got promoted above his competence or became corrupt or complaisant.  There is no need to provide him with an office and retire-him-in-place.

It did not just "enable" a flat organizational structure, it forced it.  Functionally, losing 10% of the players at any given level is self-healing.  The other 90% can pick up the slack and train the incoming players.  At a span of three, the loss of one employee is 33% and the remaining two will not have time to both do their job (necessary to avoid being selected for the next year's levy) and train the new guy. 

Rejuvenation pretty much forced a span of at least ten.  Otherwise every year became a huge shit-storm as each high level manager postured, juked and waffled to avoid having to fire any of his three underlings.  It was much cleaner to tell each manager, "You have to fire one of your ten employees every year.  Plan on it."
From the movie Zootopia, the Secretary of State scene.
I wonder what it would take to get the Government to practice Rejuvenescimento. 

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