Right Attitudes

Ideas for Impact

Performance Management

General Electric’s Jack Welch Identifies Four Types of Managers

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Jack Welch's Four Types of Managers

Four Types of Managers

Jack Welch, Chairman and CEO of General Electric from 1981 to 2001, described four categories of managers in General Electric’s year 2000 annual report.

Type 1: shares our values; makes the numbers—sky’s the limit!

Type 2: shares the values; misses the numbers—typically, another chance, or two.

Type 3: doesn’t share the values; doesn’t make the numbers—gone.

Type 4 is the toughest call of all: the manager who doesn’t share the values, but delivers the numbers. This type is the toughest to part with because organizations always want to deliver and to let someone go who gets the job done is yet another unnatural act. But we have to remove these Type 4s because they have the power, by themselves, to destroy the open, informal, trust-based culture we need to win today and tomorrow.

We made our leap forward when we began removing our Type 4 managers and making it clear to the entire company why they were asked to leave—not for the usual “personal reasons” or “to pursue other opportunities,” but for not sharing our values. Until an organization develops the courage to do this, people will never have full confidence that these soft values are truly real.

Live by Corporate Values

Organizations face the challenge of developing and sustaining a culture that is both values-centered and performance-driven. They begin by developing mission and value statements that, in due course, become little more than wall decorations because the organization’s leaders and managers fail to uphold these values.

Nothing hurts morale more than when leaders tolerate employees who deliver results, but exhibit behaviors that are incongruent to values of the company. For instance, an organization that thrives on teamwork will suffer, over the long term, if a manager habitually claims all credit for his team’s accomplishments.

Idea for Impact: Core Values Matter!

As a manager, drive accountability. Hold employees responsible for their behaviors. Reward employees for proper behaviors and publicly discourage behaviors that do not uphold values. Do not make exceptions—exceptions signify your own indifference to the upholding of values.

As an employee, understand that an essential requirement for your success in your organization is your fit. Your behaviors must be congruent with the character and needs of your organization. Even if you are talented, you will not fare well if your behaviors are inconsistent with the values of your organization. Reflect on your behavior. On a regular basis, collect feedback from your managers, peers and employees. Seek change.

Keep the company values front and center in people’s mind.

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Four Questions for Employee Performance Appraisals

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Peter Drucker is widely regarded as the “Father of Modern Management,” and one of the most influential management philosophers of the modern era. In “The Effective Executive,” Peter Drucker advocates that a manager focus on an employee’s strengths when appraising his/her performance.

Four Questions for Performance Appraisals

Effective executives usually work out their own unique form of performance appraisal. It starts out with a statement of the major contributions expected from a person in his past and present positions and a record of his performance against these goals. Then it asks four questions:

  1. What has he [or she] done well?
  2. What, therefore, is he likely to be able to do well?
  3. What does he have to learn or to acquire to be able to get the full benefit from his strength?
  4. If I had a son or daughter, would I be willing to have him or her work under this person? If yes, why? If no, why?

Call for Action

Strong performance motivates outstanding performers. Therefore, managers must make it a priority to understand each employee’s motivation and strengths and provide objective, fair and consistent appreciation to keep him/her fully engaged.

Managers, however, often fail to realize the prospect of enhancing employee performance by targeting their efforts on each employee’s strengths. They often resort to deliberating over an employee’s shortcomings, and, thus attempt to develop abilities not inline with the employee’s strengths.

Address the above four questions when preparing the performance appraisal of an employee. These questions enable you, the manager, to reinforce the strengths of the employee and guide a career that focusses on his/her strengths.

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Keeping a Diary on Employee Performance

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Blog reader Sasawat from Bangkok (Thailand) asks:

“I recently joined a multinational chemicals company that uses a performance appraisal system. I supervise seven engineers. To help me do their performance evaluations at the end of the year, should I maintain a diary to record their projects and actions?”

Most managers rely on employee performance in the period immediately preceding the performance evaluation deadline. Unfortunately, they do not weigh performance from throughout the year (or quarter, if their organizations use a quarterly review system.) Some employees exploit this behavior by slacking-off during most of the year and by shaping-up in the weeks before a performance evaluation is due.

Keeping a Diary on Employee PerformanceA log or a diary will help managers record employee projects and behaviors in one location. Clearly, recording significant and relevant examples of employee performance helps managers write objective performance summaries.

Recording events in a dairy every week, however, becomes overwhelming when you have seven employees. Instead, ask each employee to keep a diary of his/her achievements. Review this information with your employee once every week. Give regular, specific feedback, both affirmative and corrective. This ensures that you keep yourself informed of your employee’s work and demonstrates that you care about his/her current work and achievements.

When a performance evaluation is due, study the employee’s diary along with your notes, if any from your weekly meetings. You should not have to dig through your files or seek reports from various sources. You will have accumulated all the data you will need, in one place, to help you prepare for an effective performance evaluation statement and discussion.

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Performance Management: What is Forced Ranking?

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Reader Sriram from Chennai (India) asks,

A multinational recently acquired our 35-employee software testing company. Our personnel department sent an email on how this purchase affects us. The email mentioned a new forced ranking system for performance evaluation. Can you describe this system?

Every organization needs a formal approach to track individual contributions and performance against organizational goals and to identify individual strengths and opportunities for improvement. Typically, this system involves placing employees along a performance curve or classifying employees into categories of percentiles for performance.

Bell curve for forced ranking / performance management

Jack Welch, General Electric’s former CEO, is often associated with a 20-70-10 distribution: the top 20 percent is rewarded for best performance, the middle 70 percent is rated ‘average’ and the bottom 10 percent is coached for improvement. The ‘rank-and-yank’ system, also associated with Jack Welch, automatically terminates employees in the bottom category, allowing organizations to purge the worst performers.

Although an individual’s supervisor conducts the formal performance review discussion, management higher-ups assign the individual’s ranking following debates on performances of comparable individuals from across the organization. Often, these higher-ups are not knowledgeable enough of an individual’s performance. An individual’s ranking then depends on the supervisor’s willingness to fight on behalf of the individual. The ranking is ‘forced’ because an individual may be ranked in a lower category regardless of whether the direct supervisor (and hence the most knowledgeable reviewer) would have rated the individual that way on his/her own.

In intent, the forced ranking system is an excellent method for rewarding top performers and setting specific deadlines for improvement for poor performers. Despite its appeal, the system has several drawbacks. For instance, the system promotes individual performance over teamwork and often leads to dissatisfaction among ‘average’ and poor performers. In my opinion, most of this dissatisfaction stems from poor administration of the system at the ground level. I will cover this in another blog article.

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