By Jerry Bellune
Country folks know about seed corn.
That’s the part of the crop you save to plant the following year. Without it, you won’t have anything to plant.
Wall Street Journal reader Bill Taylor reminded me of that after retired General Electric Chairman Jack Welch died.
Bill wrote that Welch cut costs by firing the lowest 10% of employees every year.
“That’s doom in a high-tech company,” he wrote. “Designing the next generation of jet engines or power-generation equipment requires a great deal of trust and cooperation between engineers. His 10% cutoff for survival destroyed cooperation.
“What if you helped someone and his elevation pushed you below the survival threshold? Mr. Welch cut costs by cutting back on R&D which was doom in a business which needed competitive advantage to earn high margins to support its workforce. He cut costs by eating the seed corn.”
If you’re tempted to follow Welch’s example, do it carefully. Getting rid of losers means getting rid of anything, or anybody, that doesn’t justify the cost.
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