But haters can rejoice: It's finally starting to topple. The annual performance review has been a ubiquitous and generally loathed fixture of the corporate world for decades. Of course, that discounts the often highly negative experiences of employees at some companies that took up the practice. But somehow adults can't take it? Explain that one to me." We grade children in school, often as young as 9 or 10, and no one calls that cruel. "Yes, I realize that some believe the bell-curve aspect of differentiation is 'cruel,'" Welch wrote. He argues that "rank and yank" is a pejorative term, and prefers to call it "differentiation." But he argues forcefully that candid appraisal of employees is essential, that they need to know exactly where they stand in an organization, and that with constant communication and feedback, it isn't as harsh as people make it out to be. But as recently as 2013, he defended the bell curve in The Wall Street Journal (paywall). Welch doesn't comment on current GE practices. That just isn't current with how I think we're working and how many of the employees that we're looking to attract or grow have been raised." "It's a process that looks in the rearview mirror, that's focused on what you've done a year ago. "When you think of the leadership association people have with Jack Welch and the ranking and rating, it suited a certain time it does not suit today and today's worker in my opinion," Adobe HR head Donna Morris, who led that company's transition away from annual reviews and ratings, told Quartz. It leads to a tendency for HR to focus excessively on process over outcomes. There's a growing realization that the annual review just isn't a particularly good way to manage people or to boost performance. It's the way millennials are used to working and getting feedback, which is more frequent, faster, mobile-enabled, so there were multiple drivers that said it's time to make this big change." "I think some of it, to be really honest, is millennial-based. "The world isn't really on an annual cycle anymore for anything," Peters told Quartz. But his style and focus on the annual performance review simply doesn't work for the company or its younger workforce any more, say GE human-resources executives. Parts of his legacy remain at GE, particularly his insistence that managers be given ownership of their businesses. Welch's approach to management made him a legend at GE and American business schools. In a lot of ways, he ran the company by sheer force of will and personality. Welch was a believer in confrontation, in "brutal candor," in argument, and in pushing people extremely hard. Along with its rank and yank policy, GE also subscribed to Six Sigma, a manufacturing quality protocol that worked to ruthlessly boost quality control and eliminate mistakes. Fortune Magazine dubbed him the "manager of the century" in 1999. Welch's rapid cost cutting and wholesale reorganization of the company led to the nickname "Neutron Jack." The company's value increased by more than $300 billion during his reign, making it the world's largest at one point. That economic reality led to obsessions with cost, efficiency, and operational excellence, which were embodied in Welch's management style. In 1994 - near the mid-point of Welch's tenure - nearly 60 percent of GE sales came from a vast number of industrial businesses that were becoming increasingly commoditized. It was a bloated industrial conglomerate that was facing extraordinary competition from Asian manufacturers. Welch's intense and widely imitated approach made sense for the GE of yesteryear. They mark an emphatic break from the hard-charging style Welch embodied as CEO from 1981 to 2001. It's made broad changes in its management style too, under current CEO Jeff Immelt. By the end of the transition, industrial businesses will provide over 90 percent of earnings (PDF), and the only lending the company will do will be to customers buying industrial machinery. It's fundamentally restructuring to refocus on its increasingly high-tech and industrial businesses, emphasizing things like power and water infrastructure, advanced jet turbines, and imaging equipment. It's selling off billion-dollar pieces of the lucrative financing business that imperiled it during the 2008 crisis and led to a "too big to fail" designation. Its move to dump the annual review for large swathes of its workforce underscores a sweeping shift underway at the blue-chip conglomerate. Founded by none other than the great inventor Thomas Edison, it's well into its second century of existence. There are few companies in America that have General Electric's legacy.
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