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Short Paper Jack Welch

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Case Study: Jack Welch

        I think that the “Rank-and-Yank” is a terrible idea. I believe that it belittles the other members of the organization. It might have been a successful business approach for shareholders, but I believe that it is not beneficial to employees, and people associated with General Electric.

        A pro associated with this approach would be that it was very profitable for shareholders. According to Steiner (2012), “If you had invested $100 in GE stock when welch took the reins and held it for 20 years, it would have been worth $6,749” (p.147). Another pro of this approach is that it causes employees to try their best, because they know they will lose their jobs if they don’t perform at the highest level. A con of this approach is that it could hurt the confidence of the workers with low ranks. According to Steiner (2012), “At first, GE ranked employees in five categories instead of three, but it was soon discovered that everyone who failed to land in the top category was demoralized” (p.153). When employees start to lose confidence in themselves they don’t produce the same quality work. Another con of this approach would be that it can hurt teamwork. According to Steiner (2012), “The system can also hurt teamwork by pitting people against each other” (p.153). When the team interdependence is low the quality of work suffers. If team members aren’t helping each other all that does is hurt the corporation, and the team members involved.

        I believe that this approach would do the opposite of stimulating ethical behavior for employees. According to Steiner (2012), “It may encourage back-stabbing behavior” (p.153). Employees backstabbing each other is not ethical behavior. This type of approach makes employees compete, and have to gain the upper hand on each other, and that encourages unethical behavior.

        If I was a CEO of a corporation I would not use this approach. I believe that the cons outweigh the pros. There are too many things that can go wrong with a ranking system, and even if it is profitable for shareholders, it is not good for employees. Not only does it hurt the teamwork of employees, and their morale, but it can also affect their personal lives. According to Steiner (2012), “Working at GE was also hard on marriages because of the long hours required to be a player” (p.153). There has to be boundaries set, and if work is affecting personal life, than the approach is not beneficial.  It has been shown that other companies have gone away from the ranking system. Microsoft had the same ranking approach and it did not work out well for them. According to Warren (2013), “Eichenwald interviewed a number of current and former Microsoft employees who all cited stack ranking as the most destructive process inside the software giant.” With other companies finding this approach to be detrimental, there is no good reason why I would use it if I was the CEO.

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