You wouldn't think that Jack Welch would be one of HR's strongest advocates. This is the guy who when in charge of GE in the 1980s earned the nickname Neutron Jack for his ability to eliminate employees while leaving buildings intact.
Every year Welch would fire the bottom 10% of managers and in total more than 100,000 people were sacked over five years. The tactic worked though, with Welch increasing GE's market value by tens of billions of pounds during his 21-year tenure.
With this ability to create lots of extra work for his HR team, you might think Jack just sees HR as a hiring and firing department. But no, in his latest column in Director magazine, Welch says making people redundant is the chance for HR to show its true worth.
Every year Welch would fire the bottom 10% of managers and in total more than 100,000 people were sacked over five years. The tactic worked though, with Welch increasing GE's market value by tens of billions of pounds during his 21-year tenure.
With this ability to create lots of extra work for his HR team, you might think Jack just sees HR as a hiring and firing department. But no, in his latest column in Director magazine, Welch says making people redundant is the chance for HR to show its true worth.
"HR proves its mettle during layoffs, demonstrating whether a company really cares about its people or just spouts lip service to that effect," he writes.
Make sure managers are the ones delivering the bad news, not strangers or consultants; make sure severance arrangements are fair and equitable; listen to people's concerns, Welch advises. "HR matters enormously in good times, it defines you during bad."
Wise words from Neutron Jack, I wonder if he followed his own advice during those mass layoffs of the early 1980's?
Comments (2)
I think that General Electric's success is due to more complex issues than simply firing the bottom 10%. In the recently published paperback edition of ‘The Puritan Gift’, the Hopper brothers offer two alternative reasons – they built consistently good aero-engines and locomotives and they traded off their superb creditworthiness to fund profitable exercises in the capital markets.
To fire the bottom 10% over five years is not a redundancy exercise but a sustained exercise in judging employee performance. As one who believes that organisational performance comes from the effectiveness of systems rather than some aggregate of the best efforts of individuals, I shudder to think of the arbitrary decisions that were taken to decide who was bottom of the pile. A culture built on fear cannot be a way to build sustainable high performance – compare with the Toyota Way.
There seems to be a huge contradiction in Welch's position. To lead an organisation using such Machiavellian practices and then talk about HR proving its mettle during redundancy exercises by demonstrating that a company really cares about its people is mindboggling. Let's not waste our time by considering his approach.
Posted by Glyn Lumley | April 9, 2009 9:59 PM
Posted on April 9, 2009 21:59
I agree with Glyn Lumly that GE's success was more than just letting go of the bottom 10%. However I think on some points we disagree.
When I hear the story it always makes me think that it was about accountability and selecting the right people. It was clear that before Jack Welch took over there was not a lot of focus on the people. His actions said in essence that people are the most important part of the company. He put the people ahead of the product or service. He wanted the right people in the right jobs that makes the company successful but it also does something else....it makes the people happy in their jobs. A wonderful side effect. Or is it the other way around?
Posted by VerifyProtect.com | April 14, 2009 9:50 PM
Posted on April 14, 2009 21:50