The Project Notebook

The Vitality Curve — Its Not for Everyone

Ever wonder why the “best and the brightest” aren’t showing up on your project team? One distinct possibility is that your executive team and HR department hasn’t heard of the Vitality Curve, a concept in use by GE and other highly successful companies. But this isn’t a concept for everyone.

Jack Welch describes the concept in a 2005 article posted to Leadership Excellence Online. Its a very simple concept. On an ongoing basis, all employees are stack ranked. Names and details were passed up the chain to ensure execution. The bottom 10% was slated for an intervention — redeployment or more often an exit, particularly if this was the second or third time you fell in that category. This opened up dollars to go out and seek better performers and bring them into the company.

All performance was divided into 20-70-10 percent categories. Top performers (1-10% of the top 20%) usually received extra bonuses, perks, or benefits. For example, after a number of service years and reaching a specified salary or management level, top performers were invited to join the ELFUN society. Perks included additional investment opportunities in exclusive funds and ELFUNs were often tapped for roles in leading charitable and public service projects.

The actions built the teams and skills in the process. As a new manager, its often easy to rank the performers. Once you’ve worked with a team for a while and understand the consequences, its a lot harder to do the ranking. But this honed management and differentiation skills by forcing leaders to take deep dives into performance, strategy, and accomplishment. These deep dives fuel continuous improvement since managers were always helping people find ways to improve.

These actions created a culture of high performance. “Rank and file” employees rarely thought about it and unless you were in one of the extreme groups, you might not even know it was happening. But the results were there. There was no concept of “dead wood” or “hanging in there until something better comes along”. The company was filled with high performers and employees were motivated. But all this came at a financial cost.

To support the system, there was a complete HR system which included job descriptions, salary divisions, robust performance criteria, detailed annual performance appraisals, goals and objectives, and frequent performance feedback. There was also the cost of bonuses, rewards, and perks scaled to the organization. Execution was relentless and strategies, goals, and tactics had to be devised and reviewed. Every player had to know their position and was slotted into positions where they could be most successful. There was also no guarantee you would be in the same group forever — re-evaluation was an ongoing process. It was an unswerving dedication to continuous improvement of people and in the process, the entire organization.

The results were obvious every day. People had fun in their jobs. As a manager and project manager, I never had to worry about who would show up to work — good people were always there. And those costs I mentioned — they were usually offset by improved productivity and corporate performance. The Vitality Curve helped the company go from good to great.

This didn’t mean there weren’t tough times. While GE has always been a financial powerhouse, the economic forces are often more powerful. But with a solid performing team, recovery from setbacks is quicker and there was an understanding that the work had to continue. The people chattering in the halls about coming layoffs and hard times were often those few in the bottom 10% or those headed in that direction.

So while this might not be a concept for everyone, the GE vitality curve is a must for devotees of continuous improvement and high performing teams. If you are working on a long term (e.g. 5 year) project or program, you may want to consider starting a grass roots version to see if your team improves.

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© 2010-2012 Ray W. Frohnhoefer, MBA, PMP, CCP