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Golden Oldies: Mr. Welch, I respectfully disagree…

by Miki Saxon

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies is a collection of what I consider some of the best posts during that time.

I’ve changed a lot since I wrote this in 2006, as has the world. For one thing, if I was writing it today I wouldn’t say “respectfully.” I don’t respect Welch or consider him a sterling example of either management or leadership. Under his watch, GE profits soared — generated by the financial engineering employed by GE Financial.

Welch instigated a review system based on forced rankings resulting in a culture of fear and mistrust, which spread through major corporations like the flu, damaging moral and trashing talent. And he believes that careers take precedence over family, marriage and life in general. If you are a boss in the 21st Century he is definitely not a role model.

Read other Golden Oldies here.

Today I take my (professional) life in my hands and disagree with an icon. Jack and Suzy Welch write a column in Business Week called, “Ideas The Welch Way” that I’ve been ambivalent about since its inception. Jack Welch is one of the gods of the business Parthenon and for a “nobody” to publicly disagree with him—well, fools rush in and all that.

The July 17 column is about what HR is and should be. My disagreement is that they seem to feel that HR should orchestrate, and even do, line management’s job. In the second paragraph they say, “Look, HR should be every company’s killer app. What could possibly be more important than who gets hired, developed, promoted, or moved out the door?”

Agreed, nothing is more important; those four actions are critical, but there is no way that the most brilliant HR person can make the call on any of them. They are neither close enough to the day-to-day actions of each department or knowledgeable enough of the work and its technical requirements to determine

  • what skills should be strengthened or what skills-hole needs to be plugged most urgently based on upcoming projects;
  • the subtle competence, latent leadership or intuitive flashes of brilliance that would bloom with effort—or what efforts would produce the best growth;
  • the level and quality of leadership and interpersonal skills in action;
  • whether/when to terminate (unless the company uses some variety of forced ranking, a practice I really detest!)

These are not only the responsibility and decisions of line managers—it’s what they’re paid for!

I’m not saying that top flight HR can’t play a real role in a company’s success. I am saying that it can’t substitute for excellent managers and that the smaller the company the less need for HR talent or, in many cases, any HR beyond benefits administration.

Look, without people there is no such entity as a company (Welch and I agree on that). In my headhunting years I saw stars at all levels change companies and dim under different management; by the same token, I’ve seen people who were terminated for poor performance become internally (and externally) recognized stars under different management.

It’s great line managers at all levels that attract and retain talent.

Managers are the reason that

  • within the same company (or division) one department has high turnover while another doesn’t;
  • within a department one manager promotes from within and fills her openings while another doesn’t.

It’s managers that raise productivity, promote innovation, and set the company on the road to success.

And it’s the CEO, supported by his senior staff, which, as Welch says, should include HR, that is the font of the culture that allows and encourages all this to happen.

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