GE: Needs to have a light on the things it brings

Recently, Michelle Malay Carter discussed the “decimation” practiced by Jack Welch at GE: where employees whose performance was in the “bottom 10%” were fired, in regular purges. Michelle, a colleague in North Carolina, does a great job at describing why this practice is simply a cover for poor management.

She links to a post by Judy McLeish which discusses some recent numbers showing broad support of the practice in the UK.

The latest research from Hudson Recruitment shows that UK business leaders do want to dismiss an annual quota of underperforming staff. The findings reveal that 61% of senior UK bosses believe that a fixed target for annual staff dismissal is healthy.

But who can really judge “performance”? If you are organized naturally, the manager has enough capacity to actually look at performance and make a judgment. But that’s only true for only about 20% of the workforce (PeopleFit research). Most managers are systematically incompetent to gauge the performance of their staff.

This becomes an exercise in monkey politics, where the Machiavellian personalities rise to the top. Which explains our current financial crisis.

I agree with Michelle in her assessment. This post makes two corrections to points made in comments to her post.

Research has shown that having low-performers actually produces higher team performance. I know that this is a counter-intuitive finding, but I’ll hazard the guess that having a deviant allows us to gauge our own behavior better. That may have actually been the secret at GE: it forced managers to hire low performers and then expel them from the community as deviants. You can get the same effect by keeping small numbers of low-performers around and simply identifying them as deviant. This may only work when you have a unnaturally organized company, though. [Read more →]