Discuss GE’s change in strategic management of its human capital; do you agree with their revised approach to evaluating their personnel?In general, should employees be ranked against one another when it comes to evaluating performance and considering their future progress in the firm?What are the challenges firms face in ensuring that their leadership, human resource management and governance structures positively influence their strategy implementation and engaged behavior? Posts and articles should be 300-500 words.
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12/11/2018
Why Bosses Should Stop Thinking of ‘A Players,’ ‘B Players’ and ‘C Players’ – WSJ
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LEADERSHIP
Why Bosses Should Stop Thinking of ‘A
Players,’ ‘B Players’ and ‘C Players’
Putting employees into performance boxes hurts the workers—and the company
We give people we see as stars more chances to succeed, while denying those opportunities to those we expect to fail.
ILLUSTRATION: DAVID PLUNKERT FOR THE WALL STREET JOURNAL
By Peter Cappelli
Updated Feb. 17, 2017 11 09 a.m. ET
It is something we all do: We meet people and put them into a category. They’re sharp, they’re
slow. They’re liberal, they’re conservative. They’re creative, they’re workmanlike.
We do it, of course, because it’s useful. It’s tough to juggle the mountain of details about
everyone we meet, and we need an easy way to think about them.
And we do it in the workplace as well, when managers routinely put employees into one of three
boxes: people who perform well (A players), those who perform poorly (C players), and those
who are stuck in the middle (B players).
But the inclination to put people into boxes and leave them there can do a lot of harm—to
managers, to the employees and to the companies they work for.
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For one thing, the boxes are just plain wrong. Broad
categories miss a lot of subtleties, so people’s true talents
and strengths often get ignored. They also make it hard to
recognize when people improve or stumble in their
performance. The notion that good performers are always
good also contributes to what psychologist Edward
Thorndike called a halo effect, the mistaken belief that if
you were an A player in one thing, you will be an A player in
another.
What’s more, our prophecies become self-fulfilling—we
give people we see as stars more opportunities to succeed,
while denying those chances to those we expect to fail.
As simple as A, B, C
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Why Bosses Should Stop Thinking of ‘A Players,’ ‘B Players’ and ‘C Players’ – WSJ
Although the A-player notion has no doubt been around forever, it was made famous by
Jack Welch in the form of his “vitality curve” describing differences in employee
M performance. It’s used as a justification for forced ranking systems, where employee
performance is judged explicitly relative to other employees. The advocacy of the A-player
framework by many consultants helps keep it in the back of the mind of most executives,
even if they don’t use it explicitly.
It’s easy to see why so many executives think this way. For starters, there is the cognitive
bias known as fundamental-attribution error: We tend to assume that people behave the
way they do because of who they are rather than the circumstances around them. For
instance, we almost always figure that drivers racing through traffic are jerks, without
considering the possibility that they are going to an emergency.
That means we assume A players perform better because they have more ability or talent
than the others. But we don’t consider that, for instance, they might have gotten a string of
easy projects where they could shine. Or maybe we think they’ve done a good job simply
because we expected them to do a good job.
Likewise, we assume that people performing poorly in their jobs are C players rather than
people who are struggling with problems outside of work or have just been given an
impossible assignment. Or again, maybe we judged them as performing worse than they
actually did because we expected them to do poorly.
The A-player model is also appealing because it’s reassuring to those at the top: It tells
them that they are leading because they are better, more capable individuals than others.
It’s worth noting that I hardly ever run into mid- or lower-level managers who believe in
this
model,
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but I
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hear it
freque
ntly as
I go up the organizational chart.
Ups and downs
If we believe the A-player notion, then managing people is pretty simple: Get rid of the C
players, encourage the A players, and keep some of the B players to do the routine work. It is
also an easy way to assign projects, identify whom to promote and make other workplace
decisions.
No doubt, a lot of managers right now are shaking their heads. They believe firmly that there
are A players, B players and C players. There are superstars and there are lousy performers.
Period.
The problem is that there is precious little evidence to support the A-player model and the basic
idea beneath it. The evidence from objective measures of actual job performance for individuals
shows that it varies a great deal over time, even within the same year.
Consider a basic question a lot of managers face. You’ve got a choice between two recent college
graduates with similar experience, but one of them has a sparkling grade-point average, while
the other’s isn’t so impressive. Which one is a better bet to hire?
For many managers, that GPA is enough to put the two potential hires into mental categories.
The better student is obviously an A player, and the stellar performance in school will carry
over to the workplace. Why wouldn’t it? The lesser student, on the other hand, will keep being
lesser on the job.
Yet extensive research shows that GPAs predict very little about job performance.
Something similar happens when managers hire from inside a company. A recent study of
internal mobility by JR Keller at Cornell University examined what happened when managers
were sure they knew a good performer to appoint to a job—in other words, when they were
positive they had somebody who fit their mental category of an A player.
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Why Bosses Should Stop Thinking of ‘A Players,’ ‘B Players’ and ‘C Players’ – WSJ
But they made better choices
when they couldn’t simply go
with the person they were sure
was the best choice. The
managers wound up with better
performers when they had to
post the vacancy internally and
assess many candidates, reading
through the details of a
candidate’s actual performance.
Or consider “high-potential”
programs, used by more than
half of U.S. corporations. In this
system, people are singled out as
A players, often after only two
years’ performance, and
groomed to rise higher and
higher in the company. Yet the
evidence shows that people are
kept in those programs no
matter what their actual
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The damage done
Clearly, the consequences of assuming people perform
the same all the time can be damaging.
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Once workers get the C-player label, they get shunted
aside or pushed out of the company, even though their
performance may well improve in the next period, especially if given a little help
On the other end, we often assume that employees with the A player label have more ability and
will be better in any job, so they get designated as high potentials. But even employees who are
the best overall performers in their team aren’t great all the time, and may not have the skills to
do a new job. That means the company isn’t going to get the best person to do that new job.
What about the people in the middle? Research shows that when employees believe their
current performance isn’t recognized, that they are stuck with a B player label even if their
performance shoots up, incentives no longer motivate them to work harder. So they give up
trying. Some simply decide to quit and start over at another company. Others stick around but
don’t put in the effort they could. Both outcomes cost the company a potentially excellent
worker—and can leave the worker embittered.
The way forward
All of which leads to the key question for managers: How do we shake off the natural inclination
to put our employees into boxes that may not reflect their actual abilities and performance?
Changing a mind-set isn’t easy. One simple step is to respond to an employee’s performance
more frequently and quickly, reflecting how variable that performance actually is. Rather than
give someone an average bonus for the year, for example, it would make much more sense to
give out those bonuses on a project basis. That could mean an excellent bonus to go with a
superb performance on one project, right after it happens, and no bonus for a poor
performance on a second project.
We should also rethink high-potential programs. Instead of sticking people in them and leaving
them there, we should monitor their performance and take them out if they slip—and slot in
people whose performance is surging.
Another technique is to create new performance categories based on the actual tasks that
people have to perform. Who is good at negotiating agreements, at running meetings, at
managing projects? Knowing such things breaks down the tendency to rely on a simple “good
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Why Bosses Should Stop Thinking of ‘A Players,’ ‘B Players’ and ‘C Players’ – WSJ
employee/bad
employee”
classification.
Finally, supervisors
must be active about
managing their
subordinates. The
evidence is
overwhelming that it
does matter how we
set expectations,
People’s true talents and strengths often get ignored. PHOTO: ISTOCKPHOTO GETTY IMAGES
assign projects, hold
people accountable for
performance, provide feedback and so forth.
The harder path
That’s not always easy to do. I was approached recently by a couple of junior human-resources
managers who asked me if I thought it would help performance if their company held
supervisors accountable for the way they managed their own subordinates, including how
carefully they assessed their direct reports. I certainly did, I said.
Then they told me that their executives had recently turned down that idea. Why? The
executives said they didn’t want to have to do all that for their own direct reports.
It is easier to play along with the A-player model and assume that job performance is hardwired. It has the drawback of being wrong and bad for business.
Dr. Cappelli is the George W. Taylor professor of management and director of the Center for
Human Resources at the Wharton School. Email him at reports@wsj.com.
Appeared in the February 21, 2017, print edition as ‘Why Managers Should Stop Thinking of A, B
and C Players.’
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4/4
12/6/2018
Northeastern University
Hello, this is week five, lesson one on strategies for mergers and acquisitions. Mergers and acquisitions are a very
big part of strategy. Today mergers tend to be in the billions of dollars and are quite frequent. Almost every major
company has attempted mergers. Question becomes why mergers. Are they about making up for resource gaps?
Are they about uh, non-related diversification of the company? And do they succeed and what are the risks and
what are the issues in terms of integrating companies once they have been purchased?
Slide one, why do mergers happen…I m sorry, this is slide two, because that was an introductory slide. Slide two,
why do mergers happen? There can be many reasons for mergers. They can be a response to environment
change. For example, the industry is slowing down. Growth is slowing down so the company decides to buy
another company as a way of expanding into a new high growth industry. They can be many kinds of rational
reasons, which we will get to in a bit. They can also be outcome of a process. And finally, their goal might be to
increase value. In other words, increase financial value through increased stock prices by buying companies and
making a strategic fit with them.
Slide three, environment reasons for mergers. There are many kinds of environmental changes that may motivate
a company to do mergers. Technology shifts, uh, government deregulation. Increased foreign competition, uh,
falling prices and profits in the current business and smaller markets. In other words, markets that are no longer
growing.
Slide number four, why do mergers happen? Additional rational reasons. Uh, as I said earlier, financial reasons
dominate sometimes. The firm expects that profits and returns to capital will be higher through merging with
another company. There may also be access cash available from the company that you purchase or you can use
their access cash for your purposes. There may be the idea of efficiency and synergy, uh, clearly market power is
an answer, where you increase the total market share by combining with another firm. Uh, they may also be the
idea of buying technology uh, and finally managers can benefit because a merger makes them larger as a
company and perhaps their stock price goes up and their options become more valuable.
Slide six, the greater efficiency argument. There are studies that suggest that mergers can create efficiency
through diversification, that is you re in multiple industries and through lower risk. So generally speaking, lower
risk allows for greater financial returns. Um, another reason is operational synergies. That is you have scale
economies from additional size as well as through elimination of redundancies.
And finally, you can expand geographically through mergers, into other countries and other locations. And also
managers, managerial synergies where better managers are put in charge of weak performing units. Uh, there is
an idea that corporate control is at the heart of mergers. That one company buys another so as to gain control of
it and that there is a premium attached to buying companies. However, studies have also shown that mergers
don t always succeed. And according to Michael Porter, uh, as much as half of all companies do not create value
when they buy other companies. Of course this is just one study and there are counter examples such as Cisco
and GE that seem to be very successful in making mergers a part of long-term growth strategy.
Slide number five…slide number six, mergers and market power. Mergers can also increase total uh, market share
and thus in the industry. Uh, you can create a oligopoly if antitrust laws allow it. And you can also thus prevent
new firms from entering the industry by taking over existing firms. And it allows you to do what s called cross
subsidization of products. By selling to customers of the merged company. Selling them additional products from
your own uh, product line.
Slide number seven, technology based mergers. We talked about technology last week and it is clear that it is very
costly and risky to develop new technologies. Hence, one reason to buy other companies is to buy their patents,
buy their intellectual property and to buy their staff of highly qualified scientists and engineers.
Slide number eight, financial reasons for mergers. We ve also suggested that the stock market evaluation plays a
roll in mergers. Some people may feel that a certain company is under valued. And there by buying this company
over time, the bidder can make the value grow. He also may have a lower cost of capital. That is, he can borrow or
raise money at low cost and use it to buy companies that are under valued in the industry. And also accounting
reasons. It may be possible to buy companies, write off some of their assets and take losses which may be allowed
to shelter cash flow from existing profitable businesses off the acquirer company.
Slide number nine, mergers as process outcomes. It s interesting to consider that organizations often have
merger departments. They have lawyers and accountants and managers whose soul job is to find companies to
buy. And once you create a process, then it is of course likely that the process will seek companies to buy and
ultimately result in several mergers actually being implemented. Another economist, Eric Roll has suggested that
managers, top managers, often have hubris. And they think that because they ve been successful for a while,
they can do no wrong. And so there s a desire to go out and keep buying companies on the assumption that
they ll always uh, work out. And so we see merger waves sweeping industries. So that the global media industry
for example has consolidated over time uh, through companies such as Niess Corporation and Robin
Murdoch…Rupert Murdoch buying companies all over the world. All in the media, television and broadcasting
industries.
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Northeastern University
Slide number ten, how do mergers benefit managers? Clearly mergers allow managers to gain power. Because
they now manage much larger entities with more sales, more cash flow, more employees. As we said earlier, there
also may be financial incentives tied to stock prices, which may rise after a merger for a while and allow those
options to become more valuable. And if incentive compensation is tied to growth in assets, growth in sales, it
might be very easy to grow sales and assets through mergers. And finally, there s a time value. Managers have
plans and they wish to achieve them speedily and buying a company is much quicker than growing a company
from scratch.
Slide number eleven, analyzing strategic fit, is a diagram that suggests that the best kinds of mergers are those
that are in related industries. So that if you look at exhibit…at the slide…at the figure in exhibit eleven, on one
axis we suggest that mergers may be about adding new businesses as apposed to adding old or familiar
businesses. And on the other axis, we talk about serving new customers as opposed to serving existing customers.
When you look at it that way, buying a company with same business and the same customers is essentially buying
a company just like yourself. An identical company. Where as, the top right hand corner of the top most right hand
corner is what is known as unrelated mergers or unrelated diversification. Where you buy a company in a
completely new business with completely different customers. These are the most risky because there s very little
of current strategy, current resources and capabilities that can be used in this new company.
Last slide, screening for a target company, slide twelve. Clearly, there are criteria that can be used …
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