Ford Motor Co. has ushered in a new approach to handling underperforming salaried employees—an unusual strategy that has piqued the interest of HR professionals but that some employers might find unworkable.
The Wall Street Journal reported that the automaker has instituted a new policy for workers who have been classified as underperformers—they are being given the opportunity to accept a severance package or accept a traditional performance enhancement plan (PEP).
Ford employs about 30,000 salaried workers in the U.S. In the past, salaried Ford workers in the U.S. who were categorized as underperformers weren't given the option to take a severance package. Rather, they were placed in Ford's PEP and faced termination if they failed to meet expectations.
Management consultant Liz Weber said she's never come across an approach to performance management like Ford's new policy. She called it an impressive and "very gracious" move that demonstrates Ford supports the underperformers within its white-collar ranks.
"They are really trying to help employees who are not hitting performance standards. That tells me they're working hard to keep these people, they're trying to do right by these people," Weber said.
However, some employers might not be able to (or might not want to) "do right" by replicating Ford's performance management shift. For example, they may lack the vast resources available to Ford, whose 2021 revenue exceeded $136 billion, that enable the automaker to invest so heavily in nurturing underperformers and granting generous severance packages.
Representatives at Ford couldn't be reached for comment. But company spokeswoman Marisa Bradley told The Detroit News that the revamped policy isn't designed to prompt attrition or cut costs. Rather, the change was carried out "to reflect market practices and internal feedback," she said.
Benjamin Loring, a performance management expert in the HR practice at consulting giant Gartner, said Ford's new policy aligns with a "rethinking" of performance management over the past 15 to 20 years. A lot of employers are moving beyond the traditional "check the box" exercise that legions of employees have undergone as part of performance improvement efforts, he said. Instead, re-envisioned performance management measures are giving employees more input into setting work goals and incorporating more ways to motivate underperforming employees "to try harder."
Loring said Ford's treatment of targeting specific underperforming employees stands in great contrast to the widespread layoffs of about half of the workforce at Twitter, the social media platform, under new owner Elon Musk.
"Twitter is a particular case of bad performance management. I would say that if you want your employees to perform, you would not be doing what is going on right now at Twitter," Loring said. "This is not the kind of environment where creative and innovative work gets done or where problems get solved."
Lindsay Mastrogiovanni, an HR coach at payroll, HR and benefits company Paychex, said workplace managers like Musk could benefit from examining their own behavior when it comes to supervising underperformers.
"Give opportunities for employees to ask follow-up questions so they can better understand expectations and the outcomes they should be producing," Mastrogiovanni said. "Monitor your reaction to these conversations—negative responses can discourage employees from seeking help or asking questions."
In addition, she said, managers should rely on underperforming employees' input to "draw a road map" with clear goals from management to help them get better at their job. This should be accompanied by ongoing, constructive feedback, Mastrogiovanni said.
"Waiting until an annual or semiannual review might not be soon enough to engage with an underperforming employee," she said. "By scheduling ongoing meetings, management can express positive feedback to employees and address any shortcomings, focusing on actionable solutions or behavior changes."
Monte Deere, CEO of shoemaker Kizik, said managers at his company regularly hold private one-on-one meetings with employees to help boost performance.
"This routine privacy takes away any notion that an employee is being unfairly treated. There aren't any moments where one person is called to the principal's office in front of the whole class," Deere said. "Having an element of privacy brings a level of trust needed to address something as sensitive as talking about employee performance. Without that trust, how else will you instill confidence in that team member to improve?"
Longtime executive Kathleen Mennillo, interim CEO of the Michigan Audubon Society, cautioned employers against adopting a "one-size-fits-all" approach to performance management. That sort of approach fails to take into account the many causes of poor performance, she said.
To be sure, an employer should put in place a structured management program with elements like write-ups and performance improvement plans (PIPs), Mennillo said. But performance management should extend beyond those pieces to also include things like daily check-ins, "watercooler conversations" and genuine inquiries about outside-the-workplace interests, she said.
"Managers are critical," Mennillo said. "Being a leader carries the responsibility to bring out the best in others. The simplest way to do this is through genuine communication with staff."
As a manager, Rhett Stubbendeck, CEO of insurance company LeverageRx, said he works with underperformers to help them reach their "maximum potential." Toward that end, he incentivizes employees who have stepped up their performance with rewards like an extra paid day off. Also, Stubbendeck encourages underperformers who would benefit from more expertise to attend training seminars offered by LeverageRx.
"Sometimes, I also give them a mentor from whom they can learn and improve their work skills," he said. "However, if the low-performing employee isn't improving, I consider them a burden and threat to the organization."
John Egan is a freelance writer based in Austin, Texas.