I Article Critique 2 1.

If you were the CEO of a company would you use a system similar to the one used by Mr. Welch? Why or why not? If I were the CEO of a company I shall definitely be using a system similar to the one used by Mr. Welch at GE. As a CEO, my deepest fear will be possible exits of the most talented and productive employees from the company. And the saddest part will be if the reason they left was because they felt that they are treated same as other lesser performing colleagues. Mr. Welch went through similar circumstances during his initial days at GE. He found out that his raise was standard and his hard work was not noticed at GE. It was Gutoff, an executive at GE, recognized the potential in Jack Welch and begged him to stay. He gave Welch recognition and considered Welch as different and special. This made a big impression on Welch. Ever since that time, differentiation has been a basic part of how Welch managed employees at GE. He believed that Rigorous differentiation delivers real stars and stars build great businesses. And differentiating between the good and bad performers remained central to his vision all throughout his days at GE. An intense people focus defined his management style at GE which was to build great people who then build great products and services. For Welch what counted was the passion and intensity that star employees brought to the table. This management philosophy helped GE to retain many star performers and was mostly responsible for GE to become one of the biggest conglomerates in our times. It is clear that GE was not using suitable rewarding system initially and was about to lose a capable future CEO, who later turned GE into half a trillion dollar company. Hence star
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employees need to be rewarded suitably and need to feel that they are treated differentially. Company need to understand that good employees want their hard work to be noticed and rewarded. If everyone is to be treated almost same, the star employees will feel unappreciated. They will see that their hard work has no value. They might leave as soon as they find better opportunities at other companies. If such a system exists for some time, only mediocre employees will be left in the company which will impact bottom line and long term survivability of the company. Hence, I believe that the employees, the most important assets a company has, should be rewarded and reimbursed based on the work they do. Finally the companys success or failure depends on the employees. The employees are responsible for using scarce resources to deliver products, attract customers and earn profit for the company. These will be hard to achieve for a company, if good employees are not around. As a CEO I will be responsible for designing suitable reimbursement and reward system with an understanding that a good system will motivate employees to pursue companys goals effectively and will retain important talented employees critical for companys success. 2. It is suggested that people should not have been surprised when they found out they were in the bottom 10% and were going to be let go. Why should they not have been surprised? Mr. Welch followed the policy of employee retention following these rules: Every year GEs businesses rank their top executives Leaders were forced to identify people in their organization who they thought would fall in the bottom 10% Under-performers generally had to go
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The only way to make the firing easier was to make sure that there was no surprise to under-performers that they would be fired. Welch would have two or three meetings with the under performers to express his disappointment and would give them the chance to turn things around. He would follow up every review with a handwritten note. Some may not have appreciated the direct approach, but they knew where they stood and what was coming. So the under performers should not been surprised when they found they were in bottom 10% and were going to let go. 3. What type of system for weeding out incompetent employees would you use, or would you not weed out incompetent employees? Why or why not? I will follow a system where my companys resources are utilized efficiently and productively to maximum possible. Such state is only possible if there is a system to groom and keep top notch employees. To achieve this, I will create a proper evaluation system where employees are ranked based on their performance. First an evaluation cycle will be created, where a full day personal evaluation is conducted each early fiscal year; a two hour conference follow-up four months latter and a session right before fiscal year end that confirms and finalizes the actions committed to in April. In addition to the formal evaluation routine, I would also initiate the informal HR Cycle in which informal and unspoken personnel reviews will be done in the lunchroom, hallways and meetings. The reviews will place employees in a ranking system of three categories: A, B and C: A players who are filled with passion, committed to making things happen, open to ideas from anywhere

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B players, the heart of the company, are critical to the operational success. C players are those who cannot get the job done. They procrastinate rather than deliver. This will set up vitality curve, similar to the one used by Mr. Welch at GE. The Vitality Curve is a bell curve which divides employees into the top 20%: A, the vital 70%: B and the bottom 10%: C. I will create an appropriate reward system to support the vitality curve. A persons vitality curve rating will decide every promotion, bonus, stock option or salary raise. The As will get raises 2 or 3 times the size of Bs. Bs will get solid increases recognizing their contributions and the Cs should get nothing. I will recognize the fact that managers will not assign Cs to their subordinates as they are emotionally attached to them. To overcome this situation, I will institute a policy where bonus recommendations by managers without mentioning any Cs will be rejected and are sent back until managers come up with recommendations with real differentiation. The bottom C will let go after a year. The use of ranking system will have people know where they stand in the system. I feel that nobody wants to be at the bottom of a pile in a company and no one has any desire to be there. I think that the employees want to move on and find a place where they are more respected, where they are more appreciated. In case if my company lose employees rated A, I will conduct a detailed post-mortem and then try to change policies based on the post-mortem findings. My goal will be to reduce best employee losses to almost zero. I realize that hiring employees is expensive process. It takes eighteen months for new hire to get productive. So it will be best not to lose experienced and talented performers.

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The policy of rewarding employees if used year after year will cause the performance bar raise higher and higher until company is left with a team of absolute stars. Such a system will focus my companys core competency which is the people. I believe without question that the development of leaders and the development of high integrity-driven leaders is the winning way for the company. A company is not just bricks and mortar. It is not an idea. A company is intellect, the combined intellect of all the employees. And my employee pool will reflect that intellect. The goal is to make my company a learning company. The idea is that the best person will make other capable personal smarter too. I will make effort to get the ideas spread so that the entire company can learn. This is where the best employees at level A will help. I will be more prudent in hiring process and hire people judiciously. It will be necessary so that the count of lower level employees is less and the company does not go through firing process frequently. I also realize there will be some positions where only routine skills are required and those positions would be kept out the vitality curve review process. The employees who fall under such group will be rewarded as per companys success.

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