Turnover good for Quality? Is all employee turnover bad? Not at General Electric

[Tom Slack]

Below is an article in "The Augusta Chronicle" (Augusta, GA)Employment section on Sunday, Janurary 12. I thought Black Belts was credited for quality improvements at GE. If you have any comments, I'll be glad to forward them to the editor.

Best Wishes,

Tom

"Is all employee turnover bad? Not at General Electric.
GE is famous for requiring managers to identify and terminate the lowest 10 percent performers in each group annually. Over time, the overall quality notches up because all but the most talented performers are weeded out. Some managers find the choice excruciatingly difficult, especially after the overall level in the unit has improved over several such forced terminations. Yet former CEO Jade Welch was a staunch enforcer of this practice, and many observers attribute much of GE's success to its determined human-resource strategy."

[M Greenaway]

Tom

We discussed this a while back - crazy isnt it !

How do they determine performance ?

Dr Deming would be dropping his red beads in his grave !

[Mike S.]

Tom Slack said:

"Is all employee turnover bad? Not at General Electric.
GE is famous for requiring managers to identify and terminate the lowest 10 percent performers in each group annually.

It's hard to second-guess Jack Welch in business, but personally I don't think much of forced-turnover policies like this. There are undoubtably potential positives and negatives, but overall I would vote against it. What is the guarantee the new people brought-in to replace the "bad" are any better, after all they both went thru the same hiring process. I support having standards and getting-rid of poor performers if needed, but not based on mandatory terminations simply because one is in the lower 10% out of some group. The poorest performer in one group might be better than the best performer in another group. Aside from the tangible costs of re-hiring, training, etc. intangibles like damage to group cohesiveness, the fear inherent in knowing 10% of every group must go and the potential problems that can be caused by that fear, etc. to me would outweigh any benefits. JMO for the Cove, nothing worth sending to the editor.

[Kevin Mader]

It is a sad and sick GE policy. I'm sure many folks who did not fudge numbers got walking papers while those willing to fudge numbers got promoted. Just horrible. My advice: talk to the GE refugees you come across about the policies of GE. You might be interested to hear what they say.

Jack is not on my list of favorite people. In fact, the reverse is true. What Jack had working for him was a good strategic sense of where the business was going to be (tech companies), endorsed training to fullest measures as a means to promote the business, and had good timing (his rise to power in 1982 coincided with the Greatest Boom in history). However, he got the nickname "Neutron Jack" for good reason. Sadly, this was because he views folks as 'expendable resources'. This failure, in my opinion, wipes out a lot of the good he ever did.

Kevin

[Bill Ryan]

Just a quick question (as I'm sitting here in a daze waiting for a meeting to start) - Are the Managers considered a "group" and do the 10% poorest performing managers get terminated also????

I'm with Kevin, Mike, and Martin. Unless I had no other option I couldn't work in that atmosphere. I truly can't envision having to worry that something I might be working on (potential improvement) might count against one of my "performance standards". Learning from failures (and documenting "lessons learned" for Corporate Memory) is, IMO, one of the best "teachers" around (BTW - I'm probably one of the biggest contributers to our lessons learned database ).

Bill

[Atul Khandekar]

Weeding out bad performers is not a bad idea, but setting a yearly 10% target is stretching the idea too far.

[db]

One of the baseline questions are:

"Is it working?" Has quality improved since implementing this strategy? or.....

Is the workforce now looking for ways to "CYA"? Do they look for methods to "blame" someone else so that person ends in bottom 10%? Are managers changing the "rules", or fabricating data to make themselves look better than they are?

BTW, was GE the company that redefined "defect" so they could show achieving 6 sigma?

Whenever you place an employee in a threatened position, one of two things will happen: a) the employee leaves b) the employee learns the game

How many "good" employees left GE because they did not want to "play the game"?

How many "bad" employees stay because they are good at playing the game?

This is a dangerous game that can quickly lead to an Enron experience! (IMO)

[Marc]

Also see: Neutron Jack [Welch] - slash bottom 10%.