The hardest thing in the world is to move against somebody who is delivering the goods but acting 180 degrees from [your values]. But if you don’t act, you’re not walking the talk and you’re just an air bag.
Welch has often summarized his thoughts on the essential traits of an effective manager. In his first such effort, he described four categories:
A. Delivers on commitments—financial or otherwise—and shares GE’s values. “His or her future is an easy call,” says Welch. “Onward and upward.”
B. Does not meet commitments and does not share GE’s values. “Not as pleasant a call, but equally easy.” Team-Fly(R)
C. Misses commitments but shares the values. “He or she usually gets a second chance, preferably in a different environment.”
D. Delivers on commitments but does not subscribe to GE’s values. What happens to managers who deliver the numbers but do not live the GE values? According to Welch, they get fired.
That’s a shell shock to our company, because numbers are no longer job security. Values and numbers now mean job security.
KEEP THE A’S; GET RID OF THE C’S
By January 1997, Welch was using different language to make the same points. Speaking to the company’s top 500 managers, he urged his colleagues to work hard to hang on to the “category A’s”—in other words, the team players who subscribed to the company’s values. He urged that they also nurture the B’s but move quickly to get rid of the C’s:
Too many of you work too hard to make C’s [into] B’s. It is a wheel-spinning exercise. Push C’s on to B companies or C companies, and they’ll do just fine . . .
Take care of your best. Reward them. Promote them. Pay them well. Give them a lot of [stock] options and don’t spend all that time trying work plans to get C’s to be B’s. Move them on out early. It’s a contribution.
Eight months later, Welch spoke again about the characteristics of A, B, and C managers. He told managers that the key was to demand more of the A’s, to cultivate them, and to nourish them. The best thing to do with the C’s, he said again, was to get rid of them.
Someone in the audience confessed that she had recently been forced to let some people go and that she felt bad about it. Welch replied without hesitation: Don’t feel guilty.
Callous? Not to Welch. As he saw it, it was simply good business.
As Welch watched the business environment grow much more competitive and intense in the late 1990s, he concluded that being a business leader had become far more demanding.
The thing I’ve noticed is that the intensity level and the global understanding and the facing reality and the seeing the world as it is, is so much more pronounced in December 1997 than it was 10 years ago, and certainly 15 years ago, where form was very important . . .
Global battles don’t allow form. It’s all substance. Form means somebody is not intensely interested in the company.
Welch likes to say that 20 years ago, being named CEO of a company was the culmination of a career. But today’s CEO must think of stepping into the top job as only the beginning of the real battles:
No one can come to work and sit, no one can go off and think of just policy, no one can do any of these things. You’ve got to be live action all day. And you’ve got to be able to energize others. . . . You’ve got to be on the lunatic fringe. What does all this add up to? For one thing, it means surrounding yourself with category A’s—that is, the best possible people:
The biggest advice I give people is you cannot do these jobs alone. You’ve got to be very comfortable with the brightest human beings alive on your team. And if you do that, you get the world by the tail . . .
Always get the best people. If you [don’t], you’re shortchanging yourself.
WELCH RULES
- Give employees more responsibility, and they will make better decisions. By making your employees more accountable, you make your organization more productive.
- Nurture the employees who live up to company values, even if they don’t make their numbers. Consider reassigning them if their numbers continue to falter.
- Eliminate employees who do not live the company values, even if their numbers are good. Difficult, yes, but absolutely necessary.