I’ll be honest! This editorial is simply going to be a shameless eulogy of two of the corporate world’s greatest management leaders. The first stalwart is perhaps the first one in the world to demand that ‘firing’ be termed as a formal corporate strategy! Fortune magazine nicknamed him “America’s Toughest Boss.” This apart from him additionally winning Fortune’s “Manager of the Century” title for four years in succession (1998 till 2001) and the Financial Times award of being the “World’s Most Respected Business Leader!”
When people asked him his number one management rule, he said that throughout his forty years with his company, he followed the 20-70-10 philosophy! He broke up his employees into the best performing ones (top 20%), the average (middle 70%) and the worst (bottom 10%). He praised the top ones as the company’s stars, asking others to follow them. He mentored the middle 70%, educating them what they needed to improve to become stars. And the bottom 10%? He fired them! Once at MIT, he said firing was “the kindest form of management.” He fanatically promoted that “cruel management is when you’re sweet to the bottom 10% people and let them stay.” He was resolute that firing is “right for everyone; the organisation becomes more competitive as you upgrade the talent.” In his first five years as the CEO, he fired 100,000 people. By the time he left, he had fired more than 500,000 people! When he took over as the CEO, his company was America’s eleventh largest. When he retired, it was the largest! The man is Jack Welch; the company he led is General Electric.
Though Jack did not found GE and never invented its core products himself, he taught the organisation the most important management rule of the past, and even this century: firing! Ironically, the second stalwart whom I’m going to eulogise got fired from the very company he founded, a company whose products (almost all) were personally invented by him! When he got kicked out, he was left with just one share of the company! Ironic, did I say?! In 1996, exactly ten years after he got kicked out, this man came back to his company as the interim CEO (the board got him back as the last resort); a company that was – according to most industry experts – a truly dead company going down south at that time. And what did this man do? Reported to be “tyrannical towards his employees,” this CEO often utilised “public humiliation,” firing poorly performing people at free will! It is reported that he could “enter a meeting room full of employees, call their work ‘sh#t’, and then fire them all on the same spot!” In true reality, top employees of his company were scared spineless of travelling with him in the same elevator, because by the time they got out, they could be fired! He’s currently listed as the co-inventor on 103 of his company’s product patents; and he has fired almost all inventors of non-useful (“sh#t products,” as he calls them) patents! Almost bankrupt when he came back, his company now is worth more than $108 billion; CNN reports that $1,000 invested in his company’s shares on the day he took over is worth about $36,000 today! Today, under his ‘firing’ leadership, Fortune lists his company in this current year of 2008 as “America’s Most Admired Corporation” and the number one computer company! Jack Welch now calls him “The most successful CEO of today!” We know him as Steve Jobs; founder of Apple!
World famous Sirota Consulting empirically found out that today “companies do a poor job of facing up to poor performers; it’s always the most negative finding.” A classic Forbes 2005 report confirms how “employee retrenchment actually increases loyalty!” And how’s that? Noted BCG consultant Grant Freeland confirmed in his BusinessWeek report, “Few things demotivate an organisation (and its top performing employees) faster than tolerating and retaining low performers.” The famed authors Chris Edwards and Tad DeHaven of Cato Institute statistically postulate that “poor performers can have a disproportionately large and negative effect on an organisation.” Even at the CEO level, as Booz Allen Hamilton reports, “Underperformance is the primary reason CEOs get fired.” Their summer 2007 report (Strategy+Business) shows how even shareholder returns improve significantly when poorly performing CEOs are axed. The top ten companies of the world have fired more than 58,000 low performance people in the last one year... There’s no second view! If you want your company to one day be the most admired company in the world, if you want to one day be counted as the number one globally, there’s only one rule you should follow like a mad man. Be the kindest manager! Fire at will! Shamelessly!