glasses on top of performance evaluation

In the best selling 3rd edition of Topgrading, my introduction says that a common myth about Topgrading is that every year you should force rank. Meaning rating employees from best to worst, and firing the bottom 10%. Jack Welch, former General Electric CEO, and one of the most respected CEO in the world, continues to advocate “rank and yank” in speeches and interviews. Since the consulting I did with Jack led to many talent initiatives at GE, people think I favor rank and yank.

NO WAY! The 3rd edition of Topgrading includes an extensive update to the GE case study, written by Bill Conaty, head of Human Resources under Jack Welch, and Jeff Immelt (current CEO). Not only do I not favor rank and yank, Bill states clearly that Jack did not either!

Huh? In speeches given to CEOs I’ve seen Jack ask the audience how many believed if they fired the bottom 10% the company would be more successful. Almost all hands go up. “Then do it,” Jack would challenge.

A week before Jack and I made presentations to a large group, I begged Jack to please add an important clarification: “If a manager has Topgraded and has all A Players, of course no one would be fired right, Jack?” He said, “But few managers Topgrade and I don’t want to give them an excuse for keeping poor talent.”

In my experience managers can successfully rank and yank (some percentage, even 50%) in a house cleaning – once! To fire the bottom 10% every year would result in a horribly political and create a dysfunctional culture… and GE has NEVER done it. But Jack is just making his point – do NOT carry lame, chronically low performers.

Conaty explains what GE has done under Welch and Immelt: they rate and rank people, and if there are 5% chronic low performers, the manager is expected to remove them. If it happened to be 10% (and it’s never that high at GE except with an acquisition) sure, that bottom 10% would go.

What do you think? Are there times rank and yank makes sense? Have you done it? What did you experience?

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