Sun Tells Poor Performers ? Improve or Else

April 16, 2001 ( - Sun Microsystems has toughened up its existing employee review process and for the first time will offer severance packages to employees who cannot - or choose not to - improve their performance.

Last month, the Palo Alto-based Sun informed employees that it had streamlined its “Performance Improvement Program,” which annually identifies 10% of its workforce as poor performers, according to CNET

Improve or Else

Get more!  Sign up for PLANSPONSOR newsletters.

Under the revamped “Employee Improvement Program,” Sun managers will rank employees according to their abilities. The bottom 10% will then be offered a choice: improve performance, successfully fill another position inside Sun or accept a voluntary severance package and leave the company.

Those who try to improve will have 90 days to do so. If they don’t succeed, they will be given a severance package and told to leave.

The new program will be strictly enforced, with a forced ranking that puts 10% of the employees on notice. The company emphatically denies the program is a disguised plan for layoffs.

Managers will be subject to the same criteria.

Lower Attrition

Sun is also not filling positions opened by natural attrition and retirement, according to a company spokeswoman cited by CNET. About 1.5% of Sun’s employees depart each quarter on a voluntary basis, less than the 10% traditional annual attrition rate, as job opportunities evaporate.

In July 2000, the company had approximately 36,400 employees, a number that had grown to 42,400 by year-end. Total headcount is expected to be about 44,300 at the end of June.