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Jack Welch joined the fray about Microsoft’s abandoning “rank and yank” in a Wall Street Journal op-ed titled “Jack Welch: ’Rank and Yank’? That’s Not How It’s Done.” Welch now says that rank and yank was media-created and that it should be more appropriately referred to as “differentiation,” which is a much more caring, humane and employee-centered appraisal process. I was around when Welch was in his heyday at GE and when every word that Jack said in public ended up in lead articles in magazines and newspapers or on TV and I never remember hearing the word “differentiation.” What I remember was that Welch had little confidence in his managers’ ability to give employees bad news. Consequently, he created a system to force them to do what they were unlikely to do effectively: deal with poor performance.
The problem is that differentiation as Welch describes it is not much better than “rank and yank.” There are critical flaws in both. Whether it is called rank and yank or differentiation, it is the structure and assumptions about human behavior that have made it the most dreaded activity for managers and employees at thousands of businesses worldwide. While I appreciate that Welch wants his systems to seem more caring, compassionate, etc., he knows better than anyone that in the end it is not about intention but impact. Lest those who read Mr. Welch’s description of the way differentiation should work actually attempt to implement his ideas, let me take his points one by one and offer a different opinion – one that is based on the science of behavior. First, there are two things in the op-ed that I agree with:
Below are some of the assumptions that Welch claims make differentiation a better, more effective process than the dreaded rank and yank. Welch claims:
Although Welch now says that that the distribution, 20, 70, 10, was not set in stone, it was interpreted as such by many inside GE and in hundreds if not thousands of companies outside GE.
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