In this episode, Matt and Rick define the “Welch Matrix” from Jack Welch, former CEO of General Electric, author and business leader, and how to apply it in your business. This is a simple exercise that will provide you with great insight into how to evaluate and build a winning team.
This is more of a leadership podcast because most of the people listening are entrepreneurs with teams. This is a great review for anybody who’s in a management position or ownership position. Keeping and retaining good employees is one of the top concerns with entrepreneurs. Building a winning team of employees and helping them succeed is paramount to any business.
“Build the Best Team; You Win” Jack Welch
According to Jack Welch, the greatest asset in business is your team. And as a leader, you should invest a lot of time evaluating your team and placing each individual in the right place. He believed that companies that win are those that build the strongest teams.
He classified his team members into four categories.
On one axis is culture fit, on the other axis productivity. Welch’s advice was as follows:
- High Culture Fit, High Productivity. These are your Stars. Do whatever you can to promote, develop, and find more of these people.
- High Culture Fit, Low Productivity. Give these people a second chance due to culture fit. If they can not become productive, you will need to let them go.
- Low Culture Fit, Low Productivity. Let them go quickly. The lack of culture fit is the reason they should not be given a second chance.
- Low Culture Fit, High Productivity. These people are dangerous to your company long term.
This classification then informed decisions on placement, hiring, promotions, and firing. For most managers, the hardest people to decide what to do with are the people who are very productive, but a bad culture fit. As a manager you will be tempted to keep them around or even reward them, even though they make the lives of the people around them miserable. However, you should do the exact opposite and let them go quickly. These are the people pose the largest threat to your culture by providing bad behavior for others to copy. Additionally, they will hurt your culture by driving out their most productive and well intentioned peers.
With culture fit, you should never compromise. This bar should be the highest for the most visible and most productive of your team.
2×2 matrix by Jack Welch
Rick describes these categories as:
How do you know when someone is a good fit for your culture and worth coaching? So maybe they are high performing, but do things that reflect poorly on your company, or maybe they are toxic to the other team members. I think in this case, we would call this person a terrorist. So I think you could give them a couple of options here. You could give them coaching if they are a high performing sales person who is crushing sales because that’s a great skill. As the business owner, you really try to keep those people on the team, but you know you can’t do it at the expense of the rest of your team or your culture. So you could coach them, you could meet with them and say the way you go about these things is not good for culture. So you could try to coach them out of it, right? If not, I would say even though they’re a top performer, ultimately, they’re going to be such a detriment to the team that you’re going to have to let them go.
Have you had this person? I mean, you think about in the fitness industry and all the gyms that Matt and I have worked with like a high-performing personal trainer. Say they are making the revenue and train a lot of clients, but they’re not really on board with the vision. How many gyms owners have you talked to in the past that don’t have systems like we use at Alloy Franchises, who are literally held hostage by these terrorists? Once you’re there, I think you’ve got some tough decisions to make because they’re high performers and they’re making customers happy, but they have toxic behavior. Rick suggest addressing it head on. You should let them go, even though they’re high performers because there are rock stars out there.
Tune in to learn more about the Welch Performance Matrix and how you can apply it in your business.
- The Welch Grid (01:51)
- Who are the rock stars in your team (03:01)
- The do-gooders (04:58)
- The terrorists (06:53)
- The WTF/deadwood (10:03)
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