Management: Is Firing 10% Of Your Staff And Killing Off 10% Of Your Products Each Year The Key To Success? Should It Be?…What am I missing?

"Jack Welch famously argued that leaders should fire the bottom 10% of their workforce each year,as part of an orderly continuous improvement process."

I am currently serving on the grand jury in Massachusetts. And while I am sworn not to reveal the details of individual cases brought before us, I will say this. Half of what we deal with are really boring drug crimes. In the other half, you would not believe how cruel human beings can be to one another.

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Article:
But perhaps the most interesting part of being on the grand jury occurs once every other week or so. The grand jury in Massachusetts is classified as an investigatory body, and occasionally an assistant district attorney will come before us and say, in essence, “I don’t know if I want to go ahead with this case of not. It’s a really close call. Can you do me a favor and listen to my key witness and tell me what you think.”

Sometimes the witness is convincing. Sometimes not. Sometimes what they have to say would be enough for us to indict, but if we were on a ”real” jury we would vote to acquit. (The standard for indictment is far less than it is for convicting someone.)

I bring this all up because I need your help. I think I believe what I am about to argue. But I am not sure.

Back when he was running GE, Jack Welch famously argued that leaders should fire the bottom 10% of their workforce each year, as part of an orderly continuous improvement process. I had my doubts at the time about the argument, primarily because I could envisionage the day I would be one of the 10%. Yes, I am smart and hard-working, but if you kept cutting from the bottom, then eventually I would be the least productive employee, no matter how wonderful I am.

My thinking has evolved. I am now drawing analogies to my less-than-storied athletic history. I am coordinated and won varsity letters. But, truth to tell, I spent most of my time (rightfully) on the bench. Compared to most of the population, I was a good athlete. Compared to the best, I was not. The coaches were right not to play me, and if they cut me for someone better, I wouldn't have anything to complain about except a bruised ego.

So, my position on getting rid of the bottom 10% of your organization each year–after working hard to improve them, if you can, of course–has evolved.

And to be honest, I have no real problems with getting rid of the bottom 10% of a product line each year. You want to be constantly introducing new things and eliminating the poorest performers frees up both resources and shelf space to introduce them. So, this argument also makes sense to me.

So, it would seem to me constantly getting rid of your poorest performers–be they people or products–would be an effective way of constantly upgrading your company.

What am I missing?

Paul B. Brown | Forbes.com | September 25, 2013

2 replies
  1. Jason Hayek
    Jason Hayek says:

    The philosophy of cutting the bottom 10% is that you are keeping the best and cutting the deadwood. Since you plan for business growth year after year, it is assumed that you will be hiring replacements for the 10% you cut as well as the additional staff you need for continued growth. The average worker sitting in the middle 50% will never be cut, they are producing as expected and there is always a place for stable staff.

    In short, if you are better than most, but not as good as the best, you do not need to worry about being replaced (unless the company is decreasing staff instead of replacing). On the other hand, if you are better than most but not as good as the best, don’t expect the same bonuses they earn.

  2. Wayne
    Wayne says:

    What are you missing? I can only think of a few things. Subjective evaluation of performance, cronyism, and nepotism. Until there are reliable, repeatable, non-subjective methods of evaluating performance, people will be measured on perceived performance rather than actual performance. In some jobs performance is easy to quantify. In many knowledge jobs performance evaluation is more nebulous. And then there is cronyism. You are my buddy. We have worked together for years. We are friends. I like you. I will never put you in the bottom 10% – ever. Then there is nepotism.

    From a purely analytical point of view, pruning seems good. From the perspective of one who would have to sign the order, I don’t want to cut 10% of human staff based on subjective evaluation and bias.

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