2/2/14
Differentiation - Jack Welch's Signature Technique
*****************************************
Getting performance appraisal done correctly is critical for anyone keen on improving health of organizations over the long run. For sustaining high performance in teams, Jack Welch's signature technique for performance evaluation, called Differentiation, has been widely used in corporations around the world.
A soccer team's captain and players know what and where the "goal" is. A basketball coach knows how his team has to gel together to deliver a winning end result. A gymnast or ice-skater at the olympics gets instant feedback with scorecards about his or her performance that is measured against qualitative (artistry) as well as quantitative (degree of difficulty, number of turns) measures. The athletes know what they did well and where they need to improve next. They know the rules of the game. They know when they fall out of line versus expected norms in behavior.
In a corporate environment, this kind of clarity in performance evaluation is not always there. This is why I consider Jack Welch's Differentiation method, with numbers vs behaviors matrix, as pure genius.
Differentiation is a performance appraisal system
*********************************************************
Key to building great teams and companies through consistency, transparency and *candor*.
- make sure all employees know where they stand
- provide dignity, develop future leaders
- create winning companies
- Align performance with organization's mission and values.
Step1 - Clarify the Goal
****************************
Start with exhaustive communication of a company's
- mission (where it's going) &
- values (behaviors needed to get there)
Step2 - Appraise performance
**************************************
Evaluate employees 1-2X per year
Quantitative Results: how did their results advance the company's goals?
Qualitative Values: how well are they demonstrating its values ?
eg. does the person share ideas ?
relish building leaders?
go extra mile to delight customers ?
support team work ?
Grade using 20-70-10 framework
*************************************
Top 20% - Stars; love them and ensure they do not leave
Middle 70% - Average performers; appreciate and show how they can improve performance
Bottom 10% - Does not meet expectation; humanely ask them to move on; help find next job
Step3 - Coach with Feedback
**************************************
Show people how they can grow in the future
Differentiation is misunderstood by some in the media as a rank and yank method that lacks soul. Anyone who hears Jack directly and has spent the time to understand his rationale will appreciate that not doing Differentiation correctly will cause more damage to the souls of stakeholders.
Differentiation method, while being tremendously insightful and valuable, also has limitations in my view. It assumes that a curve will always exist. It could also breed tension that could go against team work. When corporations are in decline, this technique could get people to clam up more.
All things considered, the benefits of using Differentiation outweigh the cons.
Dr DP
Reference
Welch&Welch (2013)
http://www.linkedin.com/today/post/article/20131202152255-86541065--rank-and-yank-that-s-not-how-it-s-done?trk=mp-reader-card
Differentiation - Jack Welch's Signature Technique
*****************************************
Getting performance appraisal done correctly is critical for anyone keen on improving health of organizations over the long run. For sustaining high performance in teams, Jack Welch's signature technique for performance evaluation, called Differentiation, has been widely used in corporations around the world.
A soccer team's captain and players know what and where the "goal" is. A basketball coach knows how his team has to gel together to deliver a winning end result. A gymnast or ice-skater at the olympics gets instant feedback with scorecards about his or her performance that is measured against qualitative (artistry) as well as quantitative (degree of difficulty, number of turns) measures. The athletes know what they did well and where they need to improve next. They know the rules of the game. They know when they fall out of line versus expected norms in behavior.
In a corporate environment, this kind of clarity in performance evaluation is not always there. This is why I consider Jack Welch's Differentiation method, with numbers vs behaviors matrix, as pure genius.
Differentiation is a performance appraisal system
*********************************************************
Key to building great teams and companies through consistency, transparency and *candor*.
- make sure all employees know where they stand
- provide dignity, develop future leaders
- create winning companies
- Align performance with organization's mission and values.
Step1 - Clarify the Goal
****************************
Start with exhaustive communication of a company's
- mission (where it's going) &
- values (behaviors needed to get there)
Step2 - Appraise performance
**************************************
Evaluate employees 1-2X per year
Quantitative Results: how did their results advance the company's goals?
Qualitative Values: how well are they demonstrating its values ?
eg. does the person share ideas ?
relish building leaders?
go extra mile to delight customers ?
support team work ?
Grade using 20-70-10 framework
*************************************
Top 20% - Stars; love them and ensure they do not leave
Middle 70% - Average performers; appreciate and show how they can improve performance
Bottom 10% - Does not meet expectation; humanely ask them to move on; help find next job
Step3 - Coach with Feedback
**************************************
Show people how they can grow in the future
Differentiation is misunderstood by some in the media as a rank and yank method that lacks soul. Anyone who hears Jack directly and has spent the time to understand his rationale will appreciate that not doing Differentiation correctly will cause more damage to the souls of stakeholders.
Differentiation method, while being tremendously insightful and valuable, also has limitations in my view. It assumes that a curve will always exist. It could also breed tension that could go against team work. When corporations are in decline, this technique could get people to clam up more.
All things considered, the benefits of using Differentiation outweigh the cons.
Dr DP
Reference
Welch&Welch (2013)
http://www.linkedin.com/today/post/article/20131202152255-86541065--rank-and-yank-that-s-not-how-it-s-done?trk=mp-reader-card
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