Tuesday, August 16, 2005

No Quotas

As mentioned in my previous post, I am reading the Jack Welch book. Today I would like to discuss his performance evaluation strategy that he implemented at GE.

Everyone falls into one of three groups:

A People - These people are leaders, top performers, energetic, and can execute. These people make up 20% of your team.

B People - These people are very diligent and have great potential to be an "A" person. These people make up 70% of your team.

C People - These people are underperformers, do not have potential to be an "A" let alone a "B" person. These people make up 10% of your team.

Here is the falicy. The managers at GE are required to put 20% of their team in A, 70% of thier team in B and the bottom 10% of their team in C. The C people are let go. The problem here is that they are being compared to only their team. It is quite possible that someone rated a C on one team may very well be a B or even an A on another team. Besides that, if a team is full of A people, that is too bad, managers must select 10% of the team as C. What would your organization look like if 10% of your workforce is cut every year because of a quota that must be met?

I do agree with much of what he says but by putting a quota onto letting people go is never good for morale.


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