What I learnt from Jack Welch ––The Importance of cultural fit

By Peter Ryding, founder of VicYourCoach.com.

I met Jack Welch at a dinner in 2004 when I won the National Turanaround of the Year Award.  Jack talked about recruiting only the best, expecting the best from them and being intolerant of anything less than the best. He described it as “Weeding the garden” – meaning firing the bottom performing 10% of all employees across GE globally as an incentive to keep everyone sharp and focused. In addition, any GE company that was not one of the top 3 players in its sector would be sold off. Very tough policies that actually made GE arguably one of the most successful companies in the 20th century and the ONLY one that was in the top 100 companies in the US in both the 20th and 21st century.

 

Jack’s one message that most impressed me was the importance of cultural fit, every company needs to know and understand the cultural fit of each of its employees. To do this Jack created a chart called the ‘Performance Culture Matrix’ with performance from low to high along the bottom and cultural fit from low to high up the sides. Then he would plot everyone’s position onto that chart, especially senior executives. According to Jack the success of every organisation depends upon how to treat people in ONE of those four boxes.

 

The obvious boxes to answer are:

•       High Performing and High Cultural fit – promote them.
•       Low performing and low cultural fit – fire them.

However, most organisations do a lot of the above. What they DON’T do is live Jack’s approach to the final box.  High performers who have low cultural fit. And he believes that in the 1980s and 1990s, this is the thing that made GE so successful – you FIRE THEM!  Even if they are a top performing sales director because bad behaviour and anticultural behaviour is so toxic and infectious.
My experience of detecting and treating anti-cultural behaviour at a senior level is exactly the way Jack described it.  I have never regretted getting someone out early and usually I have discovered the rest of the iceberg is there and a broad relief from customers, suppliers and employees. In each case it helped me turnaround the company even faster.

 

Whenever I took over a company as CEO I always used Jack’s matrix to plot out all the senior execs and either give them one last chance to change (which I normally regretted in hindsight – because I have found that senior middle aged, especially male, leopards very rarely change their spots), or simply discuss the terms of the brown envelope and get them out.
Now since the 1990s the shortage of talent and the battle for it that is raging right now does mean that we cannot rely upon hiring on skills then firing on culture, nor can we hire and fire and rehire, because there isn’t enough talent out there!  So, getting the hiring right by using employee recommendations, pre interview questionnaires, assessment centres, exposure to a wide range of employees and seeking views from receptionists, PAs etc is all so important. And then giving them support such as external independent coaching to avoid the most common mistakes made by newly recruited executives is key.
All modern leaders need to understand Jack’s matrix and be ready to use it. However, the real trick is to recruit people based on cultural fit ahead of just skills and then to develop them so that you avoid having any key people in that high performing and low cultural fit box in the first place. THAT is a sign of a great modern leader!

Author Peter Ryding, is an award-winning turnaround CEO, mentor to CEOs and founder of www.VicYourCoach.com