Jack Welch served as chairman and CEO of General Electric during the years of 1981 and 2001. During his tenure, the company value of GE increased by 4,000%. Jack was known for his fierce management style and his determination to win. He was also a firm believer in the 20-70-10 rule.
Jack Welch stated, “Differentiation is a way to manage people and business. If you want the best people on your team, you need to face up to differentiation. I don’t know of any people management system that does it better-with more transparency, fairness, and speed. Differentiation, like candor, clarifies business and makes it run better in every way.”
When I read Winning by Jack Welch, I was inspired by his position on differentiation. The division and transparency of the top 20, middle 70 and bottom 10 was so clearly defined that it brought various levels of performance into competitive perspective.
The 20-70-10 were categorized accordingly:
The top 20% are the over-achievers! These are the superstars who are often publicly recognized and decorated for their contributions to the organization and overall success. Secondly, there are the middle 70% who are trying desperately to climb into the top 20%. This middle tiered group is arguably the most critical. They must receive continuous coaching and education to elevate their level of expertise and performance. Finally, there is the bottom 10% who will just simply never make the cut. These low performers must be moved out and replaced with more energized and capable employees. This defined division of performance holds true in School, Sports & Business.
Each year, Welch would fire the bottom 10% of his managers and rewarded those in the top 20% with bonuses and stock options. His management approach worked well for GE, catapulting the company into hyper growth, with a market value increase from $12 billion to $410 billion dollars upon his retirement.
The 20-70-10 rule can be applied to measure employee performance, franchise performance or student academics. Regardless of the origin of application, differentiation in life is a choice. Although some are blessed with a natural talent or skill, a positive attitude and a tenacious drive can supersede all things. What are your dreams and aspirations and how aggressive are you at achieving your goals? Where will you fall in your quest for success? Top 20, middle 70 or bottom 10?
Written By: Jodie Mateu, VP of Special Events & Productivity and Franchisee