Keyword: Jack Welch

The Welches

In a recent article in BusinessWeek magazine, Jack and Suzy Welch advocated active pruning of the jerks from your organization.  They said “nothing hurts a company more than when the bosses ignore, indulge, or otherwise tolerate a jerk.”

They go on to compare employees on two scales, performance and values.  They talk about nurturing the good performance, good values players, and getting rid of the bad performance, bad values ones.  These are the obvious choices.  The third type is someone who is not up to par on performance, but deeply understands and honors the organization’s values.  Both the Welches and I feel that these people can be taught to improve their performance.

The fourth type is the star performer who doesn’t share the values.  They put it like this:

You know the type–who doesn’t?  They exist at every level in almost every organization.  These high performers can be mean, secretive, or arrogant.  Very often they kiss up and kick down.  Some are stone-cold loners, while others are moody, keeping those around them in a kind of terrorized thrall.

Jack unabashedly counsels you to get rid of these people.  He even recommends that you make it a public hanging, making sure everyone knows why the person was canned, so they can learn from the experience.

Although I don’t always agree with him, I deeply respect Jack Welch.  I’ve had the privilege of a special conversation with him, Warren Buffet, and Bill Gates (more on that wonderful story another time).  Jack meets many of my fundamental criteria for a great leader.  He is direct, well-spoken, and looks for the simple solutions.  Sure, he has made mistakes.  Like the silly infatuation with Six Sigma or that business about charging GE for his private jet time after he left.  But the man took a lumbering behemoth of a company and turned it into one of the real stars of the last 20 years.  That’s good work, and he deserves credit.

In this case, Jack is absolutely right on target.  As former head of HR at Microsoft, I have had to deal with my share of superstar jerks to be sure.  And I have seen first hand the deep, insidious effect these people have in other organizations as well.  I even watched a whole shop floor give a standing ovation as a jerk was finally escorted to clean out his toolbox.  Jerks just need to be expunged, even if they are the best performers.  The organization needs to know that company values are more important than performance. [Side note: Joel Spolsky of Joel on Software has an interesting take on values over performance in his post here]

Even though I read this article by the Welches a few weeks ago and thought it was right on, what brought it to my attention was a letter to the editor in the December 4th edition of the magazine.  In his letter, Rabbi Richard Davis argues that “firing inappropriate workers when they are top producers is not smart, and it may even be counterproductive.”  He goes on to say:

The cycle of firing, hiring, orientation, and training as a policy is risky and expensive.  New hires are the devils we don’t know.  Difficult yet valuable managers can often be brought along with less expense and with significant return on investment.  Professional coaching designed to focus on the developmental tasks of executive growth, with a commitment to align with corporate values, has been shown to produce effective, lasting change.

With all due respect to the Rabbi, and with the important note that I’m also an executive coach, he is trivializing the problem.  It is too easy to underestimate the damage that jerks do to the organization.  And making a leopard (a true jerk) change its spots (long lived habits) is exceedingly difficult.  Harder than training a new person.  Simply put: jerk is to the bone.  I am a firm believer in drawing another card from the deck rather than suffering with a hand that has lots of problems.  That next card could be an ace.

But, a key factor here is an environment that gets new people up to speed promptly.  You need to be confident that you have the systems in place to train and develop the newcomers in a way that is not “risky and expensive”.  You need this not only to backfill for the jerks you shot, but also for the health of the company in the first place.

Under Jack, GE had exceptional talent development systems — just look at all the CEOs they produced.  I also had the privilege of spending a day with their head of HR, to study their amazing development systems.  I’ll relate that fascinating visit some other time as well.  But the key to Jack’s low tolerance for jerks, and his belief in turning out the bottom 10% of employees as well, is his confidence that he could draw another card from the deck and be happy with the result.  His systems could identify the jacks and turn them into aces, and also quickly tell the twos and threes from the rest.

None of this is to say that I don’t think people never change.  I have seen true jerks mellow over time — lots of time.  I just don’t think you or your organization needs to wait them out.  And maybe, just maybe, your canning the jerk will be just the kind of cold water in the face they need to start turning around.  On someone else’s dime.

James McNerney took over as CEO of Boeing a little more than a year ago.  But you haven’t heard much about him for the last year.  That might lead you to think he’s not been busy.

But he’s been doing what any good deciple of Jack Welch would do when taking over a company — “deep dives”, taking a long hard look way down in the organization to see what he inheritted.  I’m sure it was an eye-opener.

Jim McNerney

Boeing has taken a lot of hits for a long time, not just in the recent ethics scandals.  In Seattle, Boeing has been ridiculed as the epitomy of bloated big business.  One nickname from the late 20th century was “the lazy B”.  Around here, you can pick out the Boeing employees just like the Microsoft ones.  They are stereotypical nerds all, differing largely only by the generation.

The tens of thousands of proud Boeing plane builders are local fixtures, and their relationship with company management has been rocky since the beginning.  Not aided by a argumentative union (see my post on that here), the ebb and flow of the company’s fortunes take the larger local economy with it.  This effect has been lessened, but by no means removed, by the additional of software and biotech to the local scene.

Boeing’s relationship wtih Seattle hit a big low, when the former CEO Phil Condit made the rather absurd move to take it’s headquarters to Chicago.  This choice was ridiculous because the company had essentially no business operations nearby (and was shuttering those it did have).

In an amazing show of hubris, Condit held a public contest to see which city would give the most largesse to Boeing for moving their headquarters there.  In an over-hyped press event, the company selected Chicago while on board a Boeing jet headed for…  may I have the envelope, please…  Chicago!  It was a ridiculous spectacle, it moved less than 0.1% of the employees there, and (rumor has it) was only done because Condit and his wife wanted better restaurants and night life.  The reasoning was to put them in the middle of their customers, within a short flight to them all.  But, in point of fact, their largest growth market for the company is the Pacific Rim, and Seattle is far closer to those customers.  Yet another reason why Condit is long gone.

All of this makes McNerney’s challenge even more important especially to those around here.  He needs to restore a sense of sanity in a company that seems to lost its way much like Enron, Worldcom, and the other famous debacles of the end of the last Century.

His biggest challenge may well be finding a a way to get this behemoth, famous for everything from commercial aircraft, huge government contracts, and questionable ethics, to focus on something…  anything.  The company appears to be involved in all manner of large military and aerospace projects and master of none.  As I have said repeatedly, focus on some vision, any vision, is important.  McNerney seems to agree.

With recent wins in the big plane arena, whether because Airbus is stepping on its own tail or not, McNerney has a great chance to celebrate some successes, and move toward the future.  Their new “Dreamliner”, the 787, looks to be a hit — just what the company needs right now.  If they can actually ship the thing (friends inside tell me this will be no small accomplishment) they stand to regain their crown as the world’s planemaker.

This gives Jim McNerney one great leg upon which to rebuild the company, and I wish him the best of luck.  Not only because my own selfish interests wish well for Seattle, or because Boeing is the strongest exporter fighting in our national balance of trade war.  Mostly I wish them well because the whole country needs to see a large company that clearly lost its way in the last century regain it in this new one.