Monday, November 15, 2010

Thoughts on the 98/2 Rule


This article talks about the 98/2 principle; essentially 98% of people are ethical and the other 2% are not. You can explain this even better than by saying most disciplinary principles are focused toward the 2% of your workers who cause problems.
Personally, this number seems low but it is not saying this is the amount of people who are unproductive, or bad workers. The article is strictly saying, 2% of the people in a given company are troublemakers and it’s sad to see companies be so proactive about preventing bad habits that are hurting the other 98%. In today’s society, this is becoming more and more evident. The behaviors of one person affect everyone!
Harold Sirkin proposes a new idea: instead of punishing the 98%, reward them. Focus policies on the 98% that are doing their job and staying ethical. By doing so, morale will increase and it will eventually weed out the 2% that aren’t pulling their weight.  "The 2 percent find themselves and the 98 percent help us find them."
This is true for so many different aspects of business, but I don’t know how it would actually work. You can take a look at other places where the 98/2 rule applies. Law enforcement is a great example; 98% of the population is being protecting from 2% of the criminals. Without police, the world would be a crazy place. Look at the housing crisis. The economy fell apart because 2% of homeowners started defaulting on loans!
What’s the alternative to stop regulating 2% of the troublemakers? More freedom and more empowerment, but the risks are also much greater. 

3 comments:

  1. That is an interesting percentage and, like you, I would have thought 2% as being low.

    You are absolutely right, there are laws and policies in place because of that 2% that is acting unethical. And it is not only in business either. Look at a company's Code of Conduct - the only time it is adjusted is to react to someone in that 2% who is acting unethical. Look at the new Social Media policies that many organizations are rolling out to their employees, that is just one of many examples. Most employees (you would hope) would not post unethical messages on their Facebook but there is always those few that ruin it for the 98%. Just as there are the employees that surf the web while at work and now every site is banned from employee use because 2% were not being productive. Just some examples that came to mind... but the examples can be endless.

    I agree... us 98% should be rewarded! But the "how" is always the bigger question. Disciplinging the 2% is much easier and less expensive.

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  2. Even if only 2% are unethical, in a country with 150 million workers, 2% means that 3 million people are unethical. That's a pretty terrifying number, even if it is a small percentage. Rewarding the 98% would be nice, but how do you make sure you catch the 2%? Punishing everyone is not ideal, but it may be the most efficient way that we CURRENTLY have to make sure that you catch the people who need to be caught. Again, this isn't an ideal system, it's not a pleasant system, and it's not something I'm calling for, just to clarify. If there was a way to stop those risks you talk about, rewards would be better, there's no doubt about that.

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  3. There are many jobs that focus on dealing with that 2%, such as the police force. I feel that by rewarding that 98% to 'take care' of that 2%, there is a strong chance of that number going down (the 2%). I realize that 3 million is still a large number to deal with when looking at the big picture, but when you hire such a large number of people to handle that 2%, I feel that there are plenty of rewarding systems that can and should be used.

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