USA Today
Companies should "love and nurture" the top 20 percent of their employees, but actively weed out the bottom 10 percent, General Electric chief executive officer Jack Welch wrote in his 20th, and final, annual letter to shareholders last week.
Welch, 65, will retire at year’s end. His letter has become a must-read for investors and executives looking for that vision thing, although this year it is signed by three other GE executives, including Jeffrey Immelt, who will replace Welch. As is customary, the letter touches on several topics:
No. 1 or No 2. One of GE’s long-standing management tenets, which has been mimicked worldwide, has become No. 1 or No. 2 in their markets. Welch has scratched that requirement, saying it leads management teams to define their markets narrowly to "nonsensical levels," and has caused GE to miss opportunities.
Span. Welch identifies this as giving customers what they need when they say they want it. High span shows poor capability of hitting a specific date, low span a great capability. "Zero is always the objective." GE plastics has reduced its span from 50 days to five.
Bureaucracy. Big companies can afford to take big swings and big risks, but bureaucracy must be "hated," Welch says.
The most poignant words are saved for the work force. The top 20 percent should be "rewarded in the soul and wallet because they are the ones who make magic happen. Losing one of these people must be held up as a leadership sin," Welch says.
The middle 70 percent should be energized to improve; the rest should be shown the door.
The most problematic leaders are those who get the job done but don’t share company values. Welch says they succeed "on the backs of people, often kissing up and kicking down."
