Performance Review Systems

Remember the “rank and yank” employee performance review system?  “Rank and yank” is the slang term for the forced ranking system which Mr. Jack Welch pioneered at General Electric starting in 1981 and which was used to gut the “bottom 10%” performers of the workforce every year.  Mr. Welch is the almost mythic GE leader who garnered the nickname “Neutron Jack” for eliminating 100,000 company jobs soon after becoming the CEO.  I do not dispute that Mr. Welch was a brilliant business person who (one way or another) consistently delivered results.  I would just never classify him as the selfless, humble person categorized as the highest level leader in Collins’ book From Good to Great.  Is the “rank and yank” system consistent with your values as a small business leader?  Shouldn’t organizations be similar to families with shared values, shared ethics and common approaches?  If you agree, then perhaps the “bottom 10%” rule is a bit of an easy out; it may let management off the hook from giving employees the tough love that they may really need.

In the family model, divorce is a normally occurring reality, and divorcing from employees for misbehavior or for not sharing the company’s values, ethics and approaches is acceptable; not controversial.  But what about the brother/sister /employee who maintains commitment, tries hard but just cannot deliver a similar degree of defined results?  Uh, just cut them off from the family?  Hardly.

In many organizations, underperforming employees who maintain commitment to the company values may very well be mis-allocated human resources; maybe their capabilities better serve the company in another capacity.  I can count on more than two hands examples of hard-working, smart employees who under-performed in one position, but then went on to a very successful career at the same company in another.  Given the investment of time and money already in some of these employees, HRInsights recommends that you, as a manager, should consider the following before choosing a point of no return for both the company and the employee.

Step 1:  Revisit the performance criteria defining the success of the position.

  • Are the criteria relevant to the employee’s function?
  • Is the employee able to influence the outcome?

Step 2:  Evaluate why the employee has under-delivered on the performance criteria?

  • Does he/she understand what is required to be successful in the position?
  • Does he/she lack a key characteristic that is critical to success in the position, eg. communication skills, leadership, ability to work independently?

Step 3:  Evaluate if there is another function in the organization which would be better suited to his/her capability set and past experience.

Step 4:  Consider transition to another position or begin termination process.

Good people who share your company’s value and ethics alone are hard to find.  Once you have identified these people, do everything you can to insert them into the right place within the organization.  And, forget about being the next Jack Welch.  Mr. Welch was a good businessman, but he is old and he was wrong.  GE has since dropped Mr. Welch’s forced ranking system, because it was just insane to force people into categories where they did not belong.  Coincidentally, there is a relatively new corporate video titled, The GE Family.  In it, one employee’s comment summarizes the point well, “Once you become part of a family, why leave?”

Comments

  1. JimF says:

    Good post! I agree with you that Jack Welch’s approach does not foster long term committment rather fear based performance. Yes there are times when we have part ways with employees and we should but absent misconduct it should be the exception not the rule.

  2. […] have communicated before my dislike for “Neutron Jack” Welch’s “rank and yank” system of performance management.  […]

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