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The document discusses the 'rank and yank' incentive system created by Jack Welch at General Electric, which emphasized individual performance and competition, leading to clear expectations but also discouraging creativity and risk-taking. Under CEO Jeff Immelt, this system became incompatible with GE's new focus on flexibility and innovation, prompting the need for a revised performance management approach that fosters teamwork and adaptability. The proposed changes aim to align incentives with the company's long-term development and cultural transformation goals.

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hossein.ahmadifard93
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14 views3 pages

Case3 Advanced

The document discusses the 'rank and yank' incentive system created by Jack Welch at General Electric, which emphasized individual performance and competition, leading to clear expectations but also discouraging creativity and risk-taking. Under CEO Jeff Immelt, this system became incompatible with GE's new focus on flexibility and innovation, prompting the need for a revised performance management approach that fosters teamwork and adaptability. The proposed changes aim to align incentives with the company's long-term development and cultural transformation goals.

Uploaded by

hossein.ahmadifard93
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Expectancies theories is exactly reflected in the

incentive system, sometimes belongs as the "rank


and yank" system, which was create by Jack Welch
at General Electric (GE). According to expectation
theory, people are trying to act because they know
their efforts will result in the performance and
prizes they want. Clear expectations were put by
Welch's system, which helped many employees to
reach or beyond determined goals before since
they knew that performance reviews had a direct
effect on their salary and job security.

By placing employers exactly against one another,


GE's performance managing system under Welch
position a heavy emphasis on individual perfection
and competition. Normally, this competitive
situation pushed people to put their own ends
rather than collaboration, which is consistent with
expectation theory's focus on clear, direct links
between input and performance. Because the
lowest 10 percent of performance were fired every
year, there was more incentive to prevent bad
things from happening.

But there were also invisible percussions from this


incentive approach. It prevents creativity and risk-
taking and promoted short-term critical thinking. To
stable their jobs, people are now more eager to
seek safe and predictable outcomes rather than
risky one, creativity, or innovative methods.

Under Welch, this aggressive and competitive


scheme fit well with GE's focus on reducing cost,
operation excellence, and strict processes control;
but, under CEO Jeff Immelt, it was uncompetitive
with the organization's director. Immelt created
Fast Works with an effort on flexibility, customer-
strategies, agile method, and quick innovation.
Welch's system did not seem to be in map with this
new approach as it did not enable the collaborate,
adapt, and iterative characteristic that Fast Works
schemes need.

Going back to Welch's incentive structures would


not work now given GE's present market problems
and its strategy pivot forward innovation and
agility. GE would instead gain from edited
performance managing system that create
flexibility, align incentive and flexibility, and
promotes cautious risk-taking, teamwork, and
adaptability-all of which would support the
company's long-term development and cultural
change goals.

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