Jack Welsh rides the bell curve

imageRight 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.

8 thoughts on “Jack Welsh rides the bell curve

  1. Well said, Mark. Like you said it’s not that the adults can’t take it – they, and the other higher-performing workers are simply aghast at the absurdity of it all. The ‘cruelty’ is the fact that the ratings are based upon relative results, and not on how you performed against your expected level. Which leads to many key contributors being laid off – solely because of the impossible circumstances created by executive short-sightedness.

    Just this week I was floored hearing about yet another layoff of a key contributor on a ‘strategic’ technology on a ‘strategic’ product with no backfill or other plans to move forward. We are all left shaking our heads while management tells us it’s necessary to ‘enhance our competitiveness.’

    1. Oh yeah, another ‘competitive’ move made by my employer (to those reading – not the same as Mark’s) was to not give the expected performance-based raises this year. Guess what, HR? … my productivity since that announcement has plummeted and hasn’t recovered! What kind of fool would continue to work hard in such an environment?

      1. They are for the most part the same Monty . I appreciate the comments. I’m trying to get a corporate cost center for my new project so that we can at least stop the line managers from laying off the employees when the “haircuts” come down on my virtual teams.

        “haircuts” or across the board cuts of 10% are more HR/MBA bulls hit. It says we don’t know what teams are under performing or if we do we don’t have the balls to do the right thing, so we are going to make everyone hurt rather take specific action to address the problem.

  2. The other thing that’s been missed so far in this conversation (which Welsh may not understand but I know everyone else does), is the size of the data set which we’re demanding meet a bell curve shape. Typically these exercises are done on a department, the group reporting to one manager, which in a technology industry is (what is it these days?) probably 20 people, maybe 30. Just not enough for statistical validity, especially if the statistics are to be used to deprive people of their livelihood (and in the USA health care).

  3. Forced distribution is exactly why I left my company. With an inept manager who didn’t clearly understand what I was being evaluated on, I was dropped into the bottom pile based on completely different metrics. A call to HR did no good either. What was amazing to me was how shocked my manager (and his superiors) was when I resigned soon after. They didn’t intend to cut me. They just didn’t want to pay me a bonus. I know not everyone has the ability or nerve to leave a good-paying job, but it’s important to know your worth and not let others think it’s OK to devalue you.

    1. Thanks Tune, it’s not clear that any performance evaluation system would avoid theses issues, but clearly a bell curve or forced distribution system just allows a poor manager to blame the system.

      1. I don’t claim to know anything about organizational theory, but the use of metrics is one thing, and the use of intuition is something else. It will cost the company way more to replace me than it would have been to keep me as a valuable asset. Assuming, of course, that I was a valuable asset. 🙂

Leave a Reply