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Don’t Drink the Welch’s Kool-Aid

Jack Welch, the retired General Electric boss, the “Tiger Woods of management,” according to investor Warren Buffett, has long been a fave of the Department of Education. That’s because he’s the mastermind of the “business model” that mandates head-rolling of ten percent of a workforce every year, even if they are, for argument’s sake, all performing magnificently. His appalling doctrine is almost charmingly presented in his 2001 co-authored autobiography, Jack: Straight From the Gut.

The book is very readable and Welch comes off as a personable, regular guy. It’s got an informal tone and it’s easy to feel like you’d be on a first-name basis with the guy, just from his narrative style. He seems like an unpretentious, fun-loving, unspoiled and even boyishly vulnerable and self-critical guy that we can all relate to. He even swears a bit to prove that he ain’t effete.

Too bad he believes that the way to energize a business (or any workplace) is to keep employees aware that they are at continual risk of being purged. His view of American (and he would like to proselytize globally) entrepreneurship amounts to a specimen of feudal philosophy.

Welch calls it “differentiation.” He says it is “important for organizations to continually remove the bottom ten percent of their employees.” He cites an instance when a store manager asked him whether two out of the 20 people he supervised needed to be fired, even though in his judgment they were performing satisfactorily.

The answer was consistent with Welch’s corporate Darwinism.

It may seem heartless but to that mindset and in that worldview it is pure spirituality. As the saying goes, “You gotta be cruel to be kind,” even after you have already culled one-tenth of your ideally stable workforce over each of several consecutive years. It’s the latest roulette.

Welch actually once flirted with a softer and wiser concept of “human resources assessment” consisting of “360 degree evaluations which take into account the views of peers and subordinates.” This is what the UFT has also advocated. But Welch broke his romantic attachment to this idea.

Given the mutual admiration between Jack Welch and the Department of Education, surely Tweed should adopt the legendary General Electric CEO’s policy, strictly adhering to it on at least an experimental basis. Let them cull the herd on Chambers Street. What a harvest that would be.

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1 Comment:

  • 1 bob_calder
    · Apr 27, 2009 at 12:53 pm

    This is very like the underwriting process in insurance. The correct way to experimentally validate it would be to use a control, the GE style, and a third company that was run with a random ten percent fired that would include the executive suite. Don’t tell me Jack won’t absolutely jump at the opportunity to discover whether he is a genius of full of himself.