Jack Welch is generally regarded as one of the greatest, if not the greatest, company-builders of our generation. At the helm of General Electric, he delivered double-digit growth and profits for decades. He says his trick was attracting, training and retaining “A” performers.
His methodology was criticized by some as harsh and insensitive. It entailed annually grading each manager as an “A,” “B” or “C” performer. Grades were based solely on the person’s performance – and that of his/her work-group – against pre-established, quantifiable and objective goals. Welch promoted the “A” players, let the “C” players go, and put the “B” players on notice to either raise their performance to an “A” or be sent packing with the “C” group.
Welch says the result was that highly talented people thrived at GE. They were recognized, supported and promoted, and they achieved great things. For this reason, talented people wanted to work at GE. They sought jobs with GE, so GE had a great advantage in the global effort to win the talent game.
But the advantage of the GE system, according to Jack Welch and others, is that mediocre performers don’t want a bright light shining on their subpar performance and don’t place their hats in the ring for a job at GE. So fewer resources have to be wasted culling the wheat from the chaff.
Welch replies to his critics that his system is not harsh at all. In fact, it’s humane. GE provides a great place for top talent to work and also makes it clear who should probably work somewhere else.
Brad and Geoff Smart also urge business owners to fill their ranks with “A” performers. The Smart brothers have become the dynamic duo in staffing for top performance. Their pedigrees include top-flight schools, work for Peter Drucker, and personnel consulting for Jack Welch himself. Together, they wrote the widely acclaimed TopGrading: How to Hire, Coach and Keep “A” Players.
I have reviewed scores of works on the topic, and I think everyone can benefit from TopGrading.
Definition of an “A” Player
An “A” player is in the top 10% of people available for a position (i.e., “best of class”). “Available” means willing to accept a job offer at the given compensation level, for a specific job, with your company at this time.
“A” players contribute more, innovate more, work smarter, earn more trust, display more resourcefulness, take more initiative, develop better business strategies, articulate their vision more passionately, implement change more effectively, deliver higher quality of work, demonstrate greater teamwork, and find ways to get the job done in less time for less money.
Of course, if you are attracting only “C” performers, picking the best of the lot won’t do much good. TopGrading means that you secure a steady flow of candidates, including “A” players.
For small companies, that can be a significant challenge. For suggestions on establishing a flow of quality talent, read “Improve the Quantity and Quality of Employment Candidates”.
A “B” player is in the next 25% (65th to 90th percentile). A “C” player is below the top 35%.
Commitment to TopGrading Is Essential but Not Sufficient
The first step to begin TopGrading is easy – just make the commitment. But putting the practice into place will take a lot of discipline, hard work and learning by trial and error. The work focuses on two core areas:
1. Hiring process
For suggestions on getting more “A” players through your hiring process, read “Improve the Quantity and Quality of Employment Candidates” and “Criteria for Evaluating and Hiring Employees”.
2. Employee review process
For suggestions on improving your employee review process, and your ability to identify your “A,” “B” and “C” performers, read “Criteria for Evaluating and Hiring Employees”.
In addition to making a commitment to attract, hire and retain high-caliber talent, TopGrading must become part of your company culture. When this occurs, you and your employees will constantly be on the lookout for “A” players to join the team. You’ll focus on setting objective performance goals for everyone, tracking performance and assessing variance. Your employees will know that it is absolutely essential they meet or exceed their established goals.
It’ll become an organization that is less political and more of a meritocracy, that is, a place where people advance based on merit (performance) rather than arbitrary criteria. Employee attrition will become more functional (losing underperformers) rather than dysfunctional (losing “A” players). And employees who succeed in this environment will develop a sense of pride, knowing that not everyone is qualified for employment at their firm. In fact, only the very best and brightest can work there. It’s an exclusive club of achievers who know how to get things done.
This vision for your company will be no less than your never-ending quest to become a great manager, and thereby build a great company. If you’re to succeed, you’ll have to give it your all. It’s complex and multifaceted, and the summary information in this issue is not enough to support and empower you. I suggest you purchase a copy of TopGrading and make it your company bible.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2012.
This publication is intended to provide general information on the subject matters covered. It is sold and distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
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