Arrow seemed like a very good company that was climbing the ranks especially after Stephen Kaufman became CEO in 1986. He was known as the CEO and chief human resource officer. Kaufman was an innovator in that he recruited and trained his employees right out of college and he would not hire “W-2 hoppers.” The goal was company loyalty by training them and letting them move up the ranks quicker than Arrow’s current employees. They were paid well for their lack of experience, but they were trained exceptionally. They were trained so well, that Arrow’s competitors began recruiting Arrow’s newly trained employees. The competitors were offering them $10,000 more than they were getting at Arrow, and they were not able to counter the offer because of the backlash that would happen from their current employees.
Kaufman was not able to instill company loyalty to keep his employees because of the competitiveness of commission. The sales men and women were constantly jumping from competitor to competitor because that’s how they were able to make the most money. A sales person’s value is their customer base and that is what the competitors wanted. Instead of offering the sales staff a competitive market wage promoting company loyalty, they stayed with commissions and they lost 300 of their original 325 employees they recruited out of college.
The next problem Arrow had was Kaufman’s obsession with performance evaluations. He was obsessed with getting a normal distribution on his evaluations that he influenced the general manager’s decisions on how they evaluated their employees. Kaufman used a 1-5 ranking system, where 5 is the best and 1 is the worst. He wanted the average to be around 3 and every employee needed two 2s on their evaluation. His influence did not stop there though. The employees that were on the “fast track” needed to be evaluated higher because they needed a way to differentiate them from the “ordinary employees” when it came time to promote that person. There was also a ranking system between regions and the best region was never the best evaluated and the worst was never evaluated the worst.
Arrow was good at encouraging their employees to do their best, but they would not give positive feedback only negative. They would tell their employees to fix this and that, and if they did, their next evaluation would show their success, but then they would have to fix something else because they received 2 more 2s. That type of evaluation and management style is very demoralizing. The employees always feel like they are being criticized and they never feel like they are doing good enough.
I read through a couple of the evaluations and they had nothing but great things to say about the employees, and they still ended up with a 3 average. One of those employees did such a great job that she was promoted with a 3 average. Another thing about the evaluations that was puzzling was that they asked double questions and the evaluator had to agree of disagree with the statement. It makes no sense. Two of the criterions ask, “Do others seek this employee’s help, or does this employee need help from others?”, “Is this employee a team morale booster or detractor?” How is the manager supposed to agree or disagree with those statements? The other evaluations were better though, and I still feel sorry for the managers that have to use those evaluations.