In turn, organizations who want to remain competitive are often required to expand and contract as the short-term nature of their business environment changes. The pattern is often cyclical -- growth this year is usually followed by downsizing the next.

Employee Performance Management

Ideally, this process should help a company hone its workforce over time by cutting out the "dead wood" during each contraction. However, the opposite has proven true. Identifying the actual top performers is more difficult than it sounds. Companies are scared to make these decisions because it requires them to make quick and seemingly subjective judgments. To avoid these hard decisions, companies fall back on arbitrary factors like seniority or office locations. Or, they leave the decision to a middle manager who is more likely to keep those he likes, rather than those who perform.

When your company needs to layoff 100 employees, do you have a way of objectively selecting mediocre performers who have a very low probability of becoming a top performer in the future? As a company executive, do you have a method for effectively keeping your middle managers accountable in objectively selecting the right people to layoff? Many companies not only find it difficult to hire top performers, but also to hang on to them, as well.