Jack Welch joined GE as a junior chemical engineer in the year 1960. Slowly he began to grow in his career & by 1981, he became CEO of General Electric. That time, the company was worth $12 billion. Twenty years later, when Jack was about to retire, the company was worth a total of $280 billion. He transformed GE’s business and revolutionised the company’s entire corporate culture with his distinctive, highly personal management style.
Jack Welch’s first job at GE was to get the newly invented plastic raw material out of the lab into production. He had to work with researchers and scientists. He faced an enormous challenge in exciting the scientists about the product’s potential. The research was entirely funded by corporate & it offered no direct incentives for scientists to focus their energy on a single business. So, the commercialization of the product suffered. The researchers just loved advanced research. Initially, Jack struggled to motivate them to put time into the development of the materials after the invention phase. In addition to that, he had no authority over them. Still, he loved the challenge. It was all persuasion. He worked hard and found ways to build relationships and motivate them. Finally, he achieved the desired results. Jack’s contribution got the attention of senior management.
In the following year, during the appraisal, Jack was given a standard rise of $1000 like every other employee in that cadre. He was shocked, disappointed and could not understand how they could treat him like others when he had offered a massive benefit to the company. He strongly felt that those standard raises were for employees who meet the minimum standards for specific periods and not based on the value an employee brings to the table.
Jack firmly believed that compensation paid to an employee should reflect the employee’s value addition to the company. As the value contribution goes up, the pay should go up. People generally think that they are entitled to get more money if they work overtime. Jack says that it is not about the time you spend but about what value you generate in those hours that counts.
Jack believed that rating people based on their performance has been part of everyone’s life from their first day in school and what was the need to stop it when we leave college.
Imagine that you met a couple of customer care representatives in your office. One, who is loyal to the company and delivers his customer support as per the script and the other, who performs beyond the job description, assists a customer to order an ‘out of stock’(in your company website) item from a competing website and converts upset customers into loyal patrons. The second representative experiments the ways to interact with customers, keep track of customer’s reaction to those experiments and make changes in the company-given script and even, shares his suggestions to the other members of the team. Will you treat them the same? Will you pay both of them the same?
The differential treatment endures in several disciplines. One Example -in the field of sports -be it football, hockey, cricket or baseball. Take the example of the Indian Men’s Cricket team -The Indian Cricket Board has grouped the players under three categories -Grade A, B, and C & their salaries vary across the categories.
Jack asks “Does differential treatment erode the very idea of teamwork? If it erodes, no sports team will exist. You build strong teams by treating individuals differently. Winning teams come from differentiation, rewarding the best and removing the weakest, like a sports team.”
Jack strongly felt that the same theory has to be extended to the office workspace too. You need to field the best players inside the office and differentiate them through the payment system.
The above content is part of the following book -
Bradley Kirkman writes, “Existing research has generally shown that leaders treating team members differently, depending on factors such as how competent they believe each member is, can result in productive teams”.
References: Jack, Straight from the Gut by Jack Welch, HBR articles by Heidi Grant, Rebecca Knight, Dorie Clark, Anna Ranieri.