Jack Welch: 'Differentiation' Personnel Management Isn't 'Rank and Yank'

Friday, 15 Nov 2013 12:42 PM

By Dan Weil

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Criticism of "rank and yank" performance appraisals of company workers has abounded in light of Microsoft's decision to change its performance grading system.

The idea of rank and yank is that employees are ranked by their performance, with the best receiving raises and promotions and the worst getting fired. Under this system, divisions must declare a certain percentage of their employees as being top performers, good performers, average performers and poor performers.

All the talk about rank and yank "makes me want to scream," former GE CEO Jack Welch writes in The Wall Street Journal.

Editor’s Note:
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"And I know I'm not alone. Because most experienced businesspeople know that 'rank and yank' is a media-invented, politicized, sledgehammer of a pejorative that perpetuates a myth about a powerfully effective real practice called (more appropriately) differentiation."

One criticism of differentiation is that it devalues teamwork, Welch explains. "Nonsense. If you want teamwork, you identify it as a value. Then you evaluate and reward people accordingly. You'll get teamwork, I guarantee it."

And some critics say the bell-curve nature of differentiation is cruel. "That always strikes me as odd," Welch says. "We grade children in school, often as young as 9 or 10, and no one calls that cruel. But somehow adults can't take it?"

At Microsoft, many employees were apparently unhappy with the company's "stack rankings," which have now been eliminated.

"Every current and former Microsoft employee I interviewed — every one — cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees," Kurt Eichenwald wrote in Vanity Fair last year.

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