Right about now lots of employees, me included, are getting those emails telling them to prepare for end of of year performance reviews. In today’s Wall St Journal, former GE CEO and modern day management Messiah takes on, or rather defends the policy known as “rank and yank” or differentiation.
Much of what he says makes sense, it’s about openness and transparency in performance. In the penultimate paragraph though, Welch blows through one of the most hotly contested aspects of modern performance ratings, the bell curve. After failing to explain it, drawing a invalid analogy, Jack proclaims “Explain that one to me”.
Well Jack, it works like this. You and your fellow business executives decide at the start of the year what you want us to achieve, in an ideal world you give us all the tools, processes and expense to achieve those objectives. In your ideal world what happens then is you have a group who over achieve, a group who achieve, and a group who under achieve. Let’s even agree that it meets your mythical 20-70-10 distribution. Everything in management think tower is well.
Then at the end of the first quarter the business numbers are not what they should be, you put the squeeze on first line managers and they cut travel. That education that 25% of the team needed gets cut, but hey there’s the Internet, they can make do. End of the 2nd quarter those expense cuts you made in the 1st quarter, that hit IT mean the system rollout we were depending on didn’t happen.
As we roll through the 3rd quarter, more expense pressures mean having to work remotely with a team in India, loses its video conferencing, two of the team quit and you tell management that all new and backfill has to come from “low cost economies” making communication across timezones even more important.
Still it wasn’t a bad year. Most of the employees found ways to cope with the constraints you put in their way, they completed one major project but that second one, despite using their own time to read up and learn on the Internet as their education got cancelled, it was a wasted effort. Despite the team pulling together, working with their management, communicating their progress a road blocks the project got canned because IT wasn’t ready and didn’t clear their backlog.
End of Year rolls around, performance reviews are done, managers put people on the bell curve based on performance and meeting their objectives. No one rewards failure right Jack? So the bell curve gets done, It’s no surprises and you cut the bottom 10%.
Then next year’s plan comes in and you have to do more with less. You don’t backfill the 10% and you give the team a “haircut” aka let go another 10% and in the meantime HR has been filling out the new “center of excellence” in Manilla, Lahore, Bangalore or some other location where they don’t even work when the local team are awake, let alone in the office.
And there we have it, the modern professional industry, who are measured on a bell curve but whose performance is totally inhibited by constraints you put in place. Even if the team manage around those constraints and are all effectively star performers given the circumstances, your bell curve still means 10% will still get cut.
So that’s why it’s cruel Jack, and yeah, we grade kids, and we don’t kick them out of school when they are at the wrong end of the bell curve.
Yours sincerely, an Executive Director who has to deal with this nonsense.