Jack Welch the legendary and former CEO of General Electric who passed away recently once said: “HR is the driving force behind what makes a winning team. We make the argument that the team that fields the best players wins. HR’s involved in making sure we field the best players.”
In his early years, JW did not think much of HR, particularly the leadership role. He used to call it the “Picnic and Benefits Crowd”. Near the end of his career, Welch had changed his tune, spending the vast majority of his time on HR, and said, “It is a crime that HR is rated so low, and that the human resources staff — the people who bring in and nurture an organization’s talent — should be ranked above the CFO, who just handles the money and finances”.
With his introduction to the “forced ranking” evaluation system, where managers divided into three groups, a top 20 percent, a middle 70 percent, and a bottom 10 percent, Welch said, “It was a crime to lie to employees to make them think they were doing good when they weren’t … and let’s face it: most of our employment appraisal is a lie. It’s postponing honest feedback.” He added that HR ought to earn the trust of employees, so they need to take care of those who do a good job, and “tell it straight” to those who are not performing well.
He believes strongly in rigorous evaluations, noting that no employee should wonder where he or she stands in the company. Weak performers, he said, should be “traded out of the team”, and he explained that this does not necessarily mean they should be fired. Often a weak performer will be a better fit in a different position in the organization.
Welch also added that HR needs to create an atmosphere of growth and excitement, to make the organization “vibrate so people feel the excitement of tomorrow instead of the pain of today.” He urged HR professionals to make their companies more informal, less bureaucratic. In Welch’s view, this will help organizations retain their best performers when the economy recovers.
He explained that HR professionals have to make their bosses smarter by giving them more than what they ask for. HR also has to insist on having a voice within upper management – a seat at the table.
He stated that HR has to engage in reality-based communication. Recognize the uncertainties in the economy, and let employees know what is going on. He believes that HR can gain the trust of employees and of upper management through honest, consistent communication and by sending the same message to employees, upper management and the media.
Finally, Jack Welch claimed that human resources is one of the most important functions in any corporation. Alas, the reality in most companies today is that human resources people do not have a seat at the corporate table when most important decisions are made.