Retention matters. Especially in the restaurant industry, where turnover runs as high as 200 percent and the average hourly worker stays only six months. At Applebee's, management professes a "people philosophy" for promoting retention. Or as it says in the company's 2004 annual report, "we treat our associates as people first and as employees second." That's a great philosophy. If only it were true.

Yesterday's Wall Street Journal reported that Applebee's is using forced ranking to reduce employee turnover. Managers rank their hourly workers and divide them by grades. Workers ranked in the top 20 percent are A players; the middle 60 percent are B players; and the bottom 20 percent are C players. How does this reduce turnover? It doesn't, unless you ignore the number of departing C players.

Here's how Applebee's is deceiving itself. Managers earn rewards for retaining A and B players, and there's no penalty for losing a C player. The managers do the grading, and they do it twice a year. So who are they most likely to grade as C players? If you guessed the workers they suspect will quit in the next six months, you're probably correct. Planning to graduate from college next spring? Since you didn't major in waiting tables, I'd better make you a C player. Closing in on retirement age? Well, you get the point.

Applebee's is not alone. As businesses struggle to prop up their stock prices, they look for new ways to spin their operating results. Sure, we have turnover, but we lose more bad employees than good ones. Hey, it worked for Jack Welch and GE, did it not?

The idea of using forced ranking as a retention strategy highlights deeper leadership issues--if, as the name implies, companies must force managers to work at retaining employees, they are ill-equipped for their leadership roles to begin with. Bookmark this post on del.icio.us

Peter Drucker, arguably the most prominent and insightful leadership thinker in our lifetime, died last week at age ninety-five. The author of more than thirty books--the first published in 1939--he was a pioneer among leadership teachers. Mr. Drucker was an early advocate of leadership as its own craft, not simply an extra duty that comes with a management title. Over a career that spanned sixty years, he foresaw the evolution of business and the effects those changes would have on motivating workers: He accurately predicted that companies would need fewer laborers and more knowledge workers. He encouraged leaders to share their organizations' mission with employees. And he understood that "management is about human beings."

Perhaps it was his upbringing--he fled Nazi Europe to come to the United States in 1937--but Peter Drucker distrusted charismatic leaders like the self-promoting celebrity CEOs who head so many of today's scandal-plagued corporations. Instead, he believed that employees are the key to any organization's success. Said Drucker, "The leaders who work most effectively, it seems to me, never say 'I.' And that's not because they have trained themselves not to say 'I.' They don't think 'I.' They think 'we'; they think 'team.' They understand their job [is] to make the team function. They accept responsibility and don't sidestep it, but 'we' gets the credit. This is what creates trust, what enables you to get the task done."

Good leaders everywhere owe a debt of gratitude to Peter Drucker. As does anyone who works for a good leader. So, in fact, do those of us trying to carry on his work. Bookmark this post on del.icio.us

What prevents our employees from doing what they do best? Usually, our emphasis on what they do worst. And when your organization is trying to move beyond "good" to "great," you need to recognize and bring out the best in everyone. That's what I told the audience at the Michigan YMCA Key Leaders Conference in Lansing, Michigan this week. You can download the slides of my keynote speech here. In addition, you can download the slides from my breakout session here. You can view these slides in PowerPoint. Bookmark this post on del.icio.us

Leaders in all walks of life need integrity. Whether you're in the for-profit business world, or on a college campus, you need to prove your credibility. That was my message to the Association of College Unions International when I spoke last weekend at the ACUI Region 7 Conference at the University of Akron. You can download the slides here. You will need PowerPoint to view these slides. Bookmark this post on del.icio.us