Fast Track

Letting employees fire lousy leaders makes it clear that everyone's accountable

At Physician Sales & Service, we encourage--no, we expect--our employees to get rid of bad leaders. Kick them out. Send them back where they came from.

Now, this is the kind of statement that earns me a lot of funny looks when I make it to audiences of CEOs. Some ask me what I think I'm doing--letting the monkeys run the zoo? (Wonder how those CEOs view their employees.) Others figure I'm just blowing smoke. Come on, Pat. You're trying to make a point, right? It doesn't really happen, does it?

But it does. In fact, we take the whole process pretty seriously. I'll tell you exactly how firing the boss happens and why it isn't so radical at all. In fact, it's really just a commonsense tool for running a high-performance business. Then I'll tell you what you have to do to make it work.

For background, you have to understand that PSS/World Medical, as our company is now known, is a far-flung organization. We distribute medical supplies to doctors' offices and X-ray supplies to hospitals and physicians. Ten years ago we had only 5 branches. Today we have 81 in the United States and 3 in Europe. Each branch has two leaders, one responsible for sales and one for operations. (We call them leaders rather than managers because we believe you manage things but you lead people.)

Once every six months or so, one of the senior people at corporate headquarters will get a call. It will be a sales rep or a warehouse supervisor or somebody else at one of our branches. "You'd better get down here," the caller will say. "This leader you gave us isn't working out."

When we get that kind of call, we hop on a plane ASAP. Once at the branch, we'll call a meeting, no leaders present.

What we hear varies. Sometimes the sales reps aren't getting the help they need. Sometimes the warehouse is a mess, and the branch isn't delivering the level of service PSS promises its customers. We'll talk it over with everyone at the branch, assess the situation, and discuss it with the leader. Funny thing--the employees are almost always right. They don't call unless something really is wrong--and until they've tried hard to solve the problem internally and failed.

If we decide they're right, we take quick action. That leader is out of there. A new one will take his or her place.

Now, we know that sounds bizarre, as if PSS had turned the whole chain of command upside down. But we haven't. We get the employees' input, but it's still a company leader who makes the decision.

And is it really so weird to take the employees' input seriously? We don't think so. A leader who isn't performing will eventually be fired anyway. Customers will quit buying from the branch. The numbers will head south. Key people will leave. After a while, it will dawn on the folks in headquarters that they'd better do something--and that something is likely to involve replacing the leader.

At PSS, we receive the message a heck of a lot faster. After all, who sees problems first? The people who are on the spot. If it's your employees rather than your customers who blow the whistle, you can take action before anyone else is aware that there might be difficulties. The workers are like a distant early-warning line, alerting you to potential trouble in time to avoid it.

It all sounds so obvious you might wonder why more companies don't rely on their employees in this manner. The reason is simple: they can't.

Think about it. How many employees at how many companies are likely to tell top management the truth? How many are comfortable going over their bosses' heads? Not many, and with good reason. They know what happens to whistle-blowers: they get the ax. The boss stays and gets the last laugh.

Besides, even if employees feel comfortable reporting a nonperforming boss, they might choose not to. After all, the poor guy would probably be out of a job. You have to dislike someone a whole lot to want to take away his or her livelihood.

At PSS, we've created a system that encourages employees to fire their leaders promptly and lets them do so in good conscience. It has three parts.

First, we have a core value that goes like this: Always communicate without fear of retribution. It's one of 20 core values we call the PSS Top 20. Every employee carries the Top 20 on a wallet-sized card. Every branch posts the Top 20 on the wall. If we ever went against that one principle, we'd be making a sham of our whole value system. So we don't.

Second, we have a practice we call the soft landing. If you're promoted to a leadership role and you fail, you're not fired--you just go back to your old job. Or maybe we'll transfer you to a smaller branch and let you get a little more experience. We fire people for things like dishonesty. We never fire them because they've taken a job that happens to be beyond their abilities at the moment. Experience has shown us that our leaders learn from their mistakes. Most who've been demoted have bounced back and are serving in leadership roles again today.

The third part of our system is the stickiest one for many CEOs: You have to apply this principle to yourself.

At PSS, we have an annual retreat for our officers and directors. It lasts a weekend, and there are some serious meetings about the company. But there's also a lot of nuttiness, celebration, and just plain fun. We play PSS Jeopardy!, a game we developed to help our people learn the business. We play a golf tournament with crazy rules. We have a barbecue or a luau.

It's a good time for everyone, but it has a serious purpose. We want PSS's officers and directors to know one another personally. We want them to feel totally comfortable talking to one another. If any company officer ever feels that the CEO--me--is doing something stupid or needs to find a new job, we want that person to go right over the CEO's head and discuss it with the board.

Any fast-track company has to hold its people rigorously accountable for their performance. But a lot of would-be fast-trackers undermine the message they're trying to send. They impose sanctions against the poor performers that are so severe that nobody tells them bad news. They exempt themselves from the accountability they demand of others. Asking employees to fire poor leaders sends the message that everyone really is accountable. But it won't work unless it's tempered with humaneness--and unless it applies to everyone in the organization, the CEO included.

Patrick Kelly, founder and CEO of PSS/World Medical, is the author of Faster Company: Building the Nuttiest, Turn-on-a-Dime, Home-Grown, Billion-Dollar Business, to be published next spring by John Wiley & Sons.