[m0nastic]

GE's system (at least the one originally set up by Jack Welch) isn't quite the same, although the idea is similar‡.

Basically there are 3 "bands" in the Welch system (with the lowest band being 10%). You reward the top band (20%) heavily, the middle band (70%) modestly, and dump the bottom band (10%) every year.

In some ways, the intent is similar to the economic class system (incentivize the middle class to become the upper class).

GE had a lot of success when they adopted that model, although obviously, they did a lot of other things as well which may have been a more direct effect (getting rid of a lot of businesses they were in, for example).

I can appreciate the ideal of constantly cutting out the bottom-performing resources, provided that the mechanism to track performance is sufficiently quantifiable (and accurate). I haven't heard enough from people at GE as to whether or not that is the case there, though.

‡ http://en.wikipedia.org/wiki/Vitality_curve#Straight_from_th...

[smackfu]

Practically, I think these systems suffer terribly from inertia effects. The top stays the top, the middle stays the middle, because it causes so much angst to move someone from the top to the middle. So the middle just gets a job somewhere else.

[SatvikBeri]

GE's executive team claims otherwise[1]. "The top 20% and middle 70% are not permanent labels. People move between them all the time. However, the bottom 10%, in our experience, tend to remain there."

[1]: http://www.ge.com/annual00/letter/page4.html