Workforce Differentiation
Differentiation Framework
July 13, 2013
Differentiation Framework
The following paper contains a discussion of (1) Jack Welch’s differentiation framework, (2) A, B, C position categorization and (3) process that must be in place for successfully differentiating your workforce.
Jack Welch’s 20-70-10 Differentiation Framework
No other principle brings more controversy, and is more misunderstood than Jack Welch’s 20-70-10 differentiation framework. In a 2005 USA Today online interview posting, Jack Welch was asked if his view on differentiation had softened since having a heart attack and attending church more frequently, with the implication that differentiation is inherently amoral, even immoral. Quite the contrary, Jack insists that differentiation is the kindest way; ‘it’s about letting people know where they stand, how far they can go, and the things they can improve on’.
Jack’s 20-70-10 differentiation framework is based on the principle that the team with the best players wins. It also offers a proven methodology for the principle’s implementation, assuming that your organization has candor and openness and an honest evaluation system for at least three years. The assumptions are important because employees have to get use to candid feedback and the concept of pay for performance. The process requires managers to assess and separate employees into three categories, the top 20%, the middle 70%, and the bottom 10%, and reward these groups differently. The top 20% are treated the best and are showered with a variety of monetary and non monetary rewards. The middle 70% are motivated with training, positive feedback and goal setting. The bottoms 10% are managed out of the organization. It is important to note that all employees are treated equally, or you won’t build an effective team. Performance, however, determines the difference in rewards.
In addition to fielding the best players, Jack’s framework benefits the organization in the following ways;
July 13, 2013
Differentiation Framework
The following paper contains a discussion of (1) Jack Welch’s differentiation framework, (2) A, B, C position categorization and (3) process that must be in place for successfully differentiating your workforce.
Jack Welch’s 20-70-10 Differentiation Framework
No other principle brings more controversy, and is more misunderstood than Jack Welch’s 20-70-10 differentiation framework. In a 2005 USA Today online interview posting, Jack Welch was asked if his view on differentiation had softened since having a heart attack and attending church more frequently, with the implication that differentiation is inherently amoral, even immoral. Quite the contrary, Jack insists that differentiation is the kindest way; ‘it’s about letting people know where they stand, how far they can go, and the things they can improve on’.
Jack’s 20-70-10 differentiation framework is based on the principle that the team with the best players wins. It also offers a proven methodology for the principle’s implementation, assuming that your organization has candor and openness and an honest evaluation system for at least three years. The assumptions are important because employees have to get use to candid feedback and the concept of pay for performance. The process requires managers to assess and separate employees into three categories, the top 20%, the middle 70%, and the bottom 10%, and reward these groups differently. The top 20% are treated the best and are showered with a variety of monetary and non monetary rewards. The middle 70% are motivated with training, positive feedback and goal setting. The bottoms 10% are managed out of the organization. It is important to note that all employees are treated equally, or you won’t build an effective team. Performance, however, determines the difference in rewards.
In addition to fielding the best players, Jack’s framework benefits the organization in the following ways;