Brad Smart helped create talent processes at General Electric when it was the most respected company in the world. CEO Jack Welch drove talent to amazing heights and has written books about his methods, but he never revealed one of his “secret weapons” that helped propel his success. Now you can learn it and begin using it today.
During my many years of consulting with General Electric, it was the most respected company — and Jack Welch the most respected CEO in the world. Welch continues to be tapped by the press about his secrets to running a successful business. He often implores leaders to raise the talent bar and hold their managers more accountable for maintaining teams of all high performers. But he rarely discloses one of his “secret weapons”, perhaps the most important lever he had for improving talent at G.E. Not only can you learn it – you can use it, starting today.
WHY DO MANAGERS PROTECT CHRONIC UNDERPERFORMERS?
Welch says that he spent 50% of his time on talent issues. Why so much time? Because so many leaders would hide their low performers. And even still today, every day, in millions of companies, managers hold operations reviews, performance appraisals, and talent reviews where they:
- Cleverly try to hype their own performance in operations reviews;
- Hide mediocre performers in talent reviews, figuring that replacing low performers is too risky – they too often turn out to be low performers;
- Wimp out in performance appraisals, tolerating mediocre performance because they are afraid the tough truth would de-motivate someone;
- “Game the system,” figuring that they’ll get a promotion next year if they work extra hard to offset a mediocre performer — because any replacement would be even less productive than the low performer for most of a year.
Implicit in “protecting” low performers is the correct assumption that most of the time, replacements turn out to be underperformers. Welch’s frequently articulated, recommended approach is to be a tough leader — to sit in on those meetings and when you see managers covering for mediocre performers, not tolerate it. Welch would encourage you to NOT wimp out, but instead insist that chronic low performers be replaced, because these tough steps are necessary in order to maintain an A Player standard.
JACK WELCH’S SECRET WEAPON: TOPGRADING
Managers who had the guts to push back against Welch’s admonitions might have said, “I know Pat is not up to par, but replacing her would be distracting and time consuming, and generally a replacement is no better.” Is this a legitimate reason to keep low performers, or a feeble excuse? For four decades Topgrading research has indicated that throughout the world companies large and small find that when they promote or hire someone:
- 25% of the replacements turn out to be the expected high performers;
- 50% are no better; and
- 25% are worse.
So, for managers who do not Topgrade, a very good reason for not replacing low performers is that, indeed, replacements usually are no better than the person replaced 75% of the time. As such, I was brought into GE as a consultant to help improve its success promoting and hiring people – in a sense, to remove that reason for living with marginal performers and make it a feeble excuse.
I helped Welch and other A Player leaders at G.E. challenge excuses and cover-ups by offering a very practical solution – methods we now refer to as Topgrading. When 8 or 9 out of 10 replacements turn out to be an A Player, it really eliminates all the feeble excuses for keeping poor performers. So since embracing the Topgrading methods, Welch’s huge advantage in those tough interviews was that if a manager complained that replacing someone was too risky, Welch could say, “Nonsense!” Topgrading would ensure a higher success rate in building teams.
In the 3rd edition of my book Topgrading are 40 named case studies where CEOs express their confidence that our Topgrading methods made their company more successful, with the average improvement an increase from 26% to 85% high performers hired. It includes an updated G.E. case study prepared by long-term head of HR, Bill Conaty, who estimates that during the Welch years G.E. enjoyed a 80%+ success rate picking managers.
SUMMARY: Perhaps the biggest reason that leaders wimp out and don’t require everyone to be a high performer is that replacing people is too risky — only 1 in 4 replacements is an improvement. Jack Welch as CEO could “get away” with demanding that managers either coach people into the high performer category or replace them because the Topgrading methods — still used at G.E. today — assured that replacements would almost all be high performers.
To start building a team of A Players at your company today, visit us at topgradingdev.wpengine.com.
Quarterly Topgrading Workshop. Learn first hand how Topgrading can help your organization avoid the cost of mis-hires. Attend or send key managers to our June 12-13 Topgrading Workshop in the Chicago area. Brad and two other Topgrading professionals will not only teach Topgrading methods but for about half of the workshop, observe and personally coach attendees in how to conduct the Topgrading Interview, analyze the information, arrive at valid conclusions, and provide feedback and coaching to the “new hire.” Workshop ratings have exceeded 9 (on a 10-point scale) for years. Click here for information.
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Published June 4, 2013