Winning - Jack Welch [14]
The middle 70 percent are managed differently.
This group of people is enormously valuable to any company; you simply cannot function without their skills, energy, and commitment. After all, they are the majority of your employees. And that’s the major challenge, and risk, in 20-70-10—keeping the middle 70 engaged and motivated.
That’s why so much of managing the middle 70 is about training, positive feedback, and thoughtful goal setting. If individuals in this group have particular promise, they should be moved around among businesses and functions to increase their experience and knowledge and to test their leadership skills.
To be clear, managing the middle 70 is not about keeping people out of the bottom 10. It is not about saving poor performers. That would be a bad investment decision. Rather, differentiation is about managers looking at the middle 70, identifying people with potential to move up, and cultivating them. But everyone in the middle 70 needs to be motivated and made to feel as if they truly belong. You do not want to lose the vast majority of your middle 70—you want to improve them.*
As for the bottom 10 percent in differentiation, there is no sugarcoating this—they have to go. That’s more easily said than done; It’s awful to fire people—I even hate that word. But if you have a candid organization with clear performance expectations and a performance evaluation process—a big if, obviously, but that should be everyone’s goal—then people in the bottom 10 percent generally know who they are. When you tell them, they usually leave before you ask them to. No one wants to be in an organization where they aren’t wanted. One of the best things about differentiation is that people in the bottom 10 percent of organizations very often go on to successful careers at companies and in pursuits where they truly belong and where they can excel.
That’s how differentiation works in a nutshell. People sometimes ask where I came up with the idea. My answer is, I didn’t invent differentiation! I learned it on the playground when I was a kid. When we were making a baseball team, the best players always got picked first, the fair players were put in the easy positions, usually second base or right field, and the least athletic ones had to watch from the sidelines. Everyone knew where he stood. The top kids wanted desperately to stay there, and got the reward of respect and the thrill of winning. The kids in the middle worked their tails off to get better, and sometimes they did, bringing up the quality of play for everyone. And the kids who couldn’t make the cut usually found other pursuits, sports and otherwise, that they enjoyed and excelled at. Not everyone can be a great ballplayer, and not every great ballplayer can be a great doctor, computer programmer, carpenter, musician, or poet. Each one of us is good at something, and I just believe we are happiest and the most fulfilled when we’re doing that.
It’s true on the playground, and it’s true in business.
REASONS TO HATE DIFFERENTIATION—AND NOT
I could spend the next couple of pages explaining all the reasons to love differentiation, but instead I’m going to list the most common criticisms the concept receives. I’m leaving aside “hardware” differentiation here, because it doesn’t get anything like the heat that 20-70-10 does.
So here are the criticisms of people differentiation. Some have truth in them, but more often than not, they don’t! Here’s what I mean:
Differentiation is unfair because it’s always corrupted by company politics—20-70-10 is just a way of separating the people who kiss the boss’s rear from those who don’t.
It is true, without question, that at some companies, differentiation is corrupted by cronyism and favoritism. The top 20 percent are the boss’s head-nodders and buddies, and the bottom 10 percent are the outspoken types who ask difficult questions