Reader Q&A: Up-or-Out, Does It Work?

Readers sent questions to Executive Coach Susan Cramm after reading her article Survivor: The Organization.

Jack Welch may not have been the first to use up-or-out but he certainly popularized it and was lionized for employing it. But did it really work for him and for GE? Or was that just hype?

A: Up-or-out has been misused by less mature companies in their misguided attempt at focusing on best practices rather than appropriate practices. If all companies could sustain the growth and build the HR competence that GE has, up-or-out would not be a business problem (only a problem of conscience).

Up-or-out cannot exist without growth because without growth, there is no up.

GE developed a set of HR policies that ensure that up-or-out is supported by clear performance expectations, frequent performance reviews, candid feedback and management accountability for talent development.

In the words of a former GE employee, “When the organization holds the manager accountable for talent development—and in fact judges and financially rewards a manager by how many new leaders she produces—then you can mix in a higher desired turnover rate and mitigate some of the downsides.”

What can one do about the employee who even after being given fresh challenges and help with direction and organization, continues to make costly mistakes, mistakes that threaten to lower morale and impede efficiency? When is enough, enough?

A: It’s enough when you have assumed 50 percent of the responsibility for the issue and you’ve done all that you can to understand the employee’s motivations, values and abilities, and, furthermore, you have placed him in a role that he’s well suited for and is excited about. The truth is, some people just aren’t in the right company, in the right place, and you do them a favor by helping them figure this out as soon as possible so that they can move on. If you do the career development and counseling right, they will realize that they don’t fit, leave on their own and thank you on their way out of the door.