[jasomill]

Sure, but there seems to be a difference between divesting of a conglomerate's lowest performing business units, lavishing on the highest-performing ones, and putting the rest on notice, and applying a similar system to a small team. The latter reminds me less of Welch than of Glengarry Glen Ross: "First prize is a Cadillac Eldorado. Second prize is a set of steak knives. Third prize is you're fired."

For anyone who hasn't seen the movie: it doesn't end well.

With respect to employees, the point of a "forcing function" has less to do with motivation than with finding some way to make change possible in a crumbling organization of fiefdoms whose managers insist that, nevertheless, "all my children are above average." If I recall correctly, Welch even points out that "C" players often go on to be "B" or even "A" players in other organizations, which doesn't change the fact that everyone can't be doing everything right when the overall organization is underperforming, so there are either weak spots, or no alternatives to immediate liquidation.

Finally, I'm quite confident Welch would agree that "blindly applying a vague principle you read in some book, then sticking with it for years because 'it worked for $MEGACORP'" is a stupid idea, regardless of who wrote the damn book!

[flyinRyan]

Well, wasn't Welsh largely applying this to sales people? If what the people do is essentially known and fully measurable then it's easy to look over a few years and say "John consistently delivers less than anyone else" and know you have the whole story. As soon as you get into software development it gets a lot hairier.

Another problem with any ranking system is that a ranking is static but actual performance is fluid. Just look at K1 results and then look at the records of the fighters. They've all fought each other and they've all lost to each other. So Hoost was better than his peers four times, but he also lost to those same people. You can say he is better in "win points", but this would never help you predict if he would win his next fight.

[kamaal]

As per Welch, stack ranking works because managers are themselves stack ranked. All the way up to the CEO.

Therefore if a manager plays politics and promotes his inefficient pets, sooner or later he comes ranked last among his peers. So if though he wants, he can't.

He also says that the stack ranking system makes it very difficult for the managers in the 3-4 year after it was implemented, because now they may have to let go some good people to retain the very best.

However it did work to a large extent in GE. Jack Welch's immediate reportees all went on to become CEO's of top companies.

But things like this blind copied and applied don't fly much. You need to implement them in spirit and that's difficult.

[jasomill]

Letting go of good people to retain the very best doesn't sound like a problem. Letting go of the very best to retain the most difficult to replace, on the other hand...

[kamaal]

Stank ranking is not ideal for everyone.

Also stack ranking requires a great leader with courage in the top who actually has the vision to take things down to the last employee. For this you need to cut bureaucracy, bring in meritocracy. And do nearly every thing your traditional exec can't.

The reason this fails is some clueless MBA's in the name of case studies take it up and blindly without knowing the spirit behind it apply to anything and everything under the sun.

Each leader has his style you can take some lessons from it. But you can't be that leader copy cloned and template act everything he did. When you do, you only do it ritually and not in spirit.

Which is what cause things like Stack Ranking to no be viable else where. Because you are not thinking as Jack Welch did, you are trying to imitate his action and hope to get the same results.

[SatvikBeri]

Yeah-if I recall correctly, Welch's point was not that the system was perfect, but that it was a massive improvement over what they had.

It's worth noting that Welch himself almost got fired from GE early in his career-so he knows that performance evaluations aren't 100 just!