Winning - Jack Welch [16]
Differentiation pits people against one another and undermines teamwork.
Try telling that to Joe Torre!
The New York Yankees function perfectly well as a team (much to the dismay of Red Sox fans like myself, I might add) with a highly transparent system of differentiation in place. Stars are lavishly rewarded; underperformers are shown the clubhouse exit. And if that’s not enough to make a system of differentiation perfectly clear, the players’ salaries are very public! You can have no doubt that differentiation is going on when some team members make $18 million a year, and others wearing the same uniform make the Major League minimum of $300,000.
And yet everyone pulls together for the team to win. Alex Rodriguez loves the thrill of hitting a grand slam home run, but I’m sure it feels a lot better to him when the Yankees win. In July 2004, Derek Jeter made the catch of the year, diving into the stands and coming up with a black eye and a cut face, a photo of which graced every newspaper in New York. A lot of the pain had to be relieved when the Yankees won, coming from behind in the thirteenth inning, in one of the great baseball games of all time.
Without question, these two stars love to excel for their own sakes. But you can bet it is always more fun and exciting when the team wins.*
Their teamwork is a testament to two other things. First, great leadership. Joe Torre obviously understands the challenges of managing in a differentiation environment.
Second, the cohesiveness of the Yankees, and of so many other sports teams, shows the positive impact of an open, honest management system built on candid performance assessments and aligned rewards. In that way, differentiation doesn’t undermine teamwork, it enhances it.
In business, there probably would be pandemonium if companies started publishing everyone’s salary, and I’m not advocating that here. And yet, people always seem to know what their coworkers are making, don’t they? That’s why they get mad when everyone on a team gets rewarded the same way when only a few people have done the work. They feel cheated and wonder why management can’t see the obvious—that not every team member is created equal.
Differentiation rewards those members of the team who deserve it. By the way, that annoys only the underperformers. To everyone else, it seems fair. And a fair environment promotes teamwork. Better yet, it motivates people to give their all, and that’s what you want.
Differentiation is possible only in the United States. I wish I could implement it, but because of our cultural values, the people in my country simply won’t accept it.
I have heard this critique of differentiation since its earliest days at GE, when one of our managers explained that 20-70-10 couldn’t be implemented in Japan because in that culture politeness was valued far more than candor. Since then, I have heard the national-culture excuse from people in hundreds of companies in dozens of nations. Recently, managers in Denmark told us that their country values egalitarianism too much for differentiation to be widely accepted. We’ve heard that case made in France too. A manager at a meeting in Amsterdam told us last year that there was too much “Calvinism in Dutch bones” for the system to work in the Netherlands. I guess the manager believed all rewards come only in Heaven, if you’re chosen to get there! And in China we heard that differentiation is a long time coming because in most state-owned enterprises—still more than 50 percent of the economy despite market reforms—many of the best jobs and rewards go to the most loyal members of the party whether they are the most talented or not.*
Basically, I think the excuses we hear about differentiation’s cultural obstacles are just that—excuses. At GE, we couldn’t have a company where differentiation existed only in our U.S. operations. First of all, we just believed too