Jack Welch, was the Chairman of General Electric and is acknowledged for building GE into one of the most successful companies in the world. During the 1980s and 90’s he was responsible for 30x growth of GE’s market value from $ 14 billion to $ 410 billion.
He built the performance culture in GE using his now famous Welch Performance Values Matrix.
What is Welch Performance Values Matrix (PVM)?
In the Performance-Values Matrix (PVM) model there are two independent dimensions; Core Values are plotted on the x-axis and Performance is plotted on the y-axis.
These were defined as follows:
- Performance: how well a team member achieves important results
- Values: how well a team member exemplifies your practice’s core values
Employees were evaluated at the end of the year on these parameters and plotted into a grid/matrix as below:
From here on the process is simple. Employees in the lower left block (low-low) were discarded – the famous 10% rule. Those in the right bottom box were identified for performance improvement.
The members in the top left box, high performers with high values were promoted and groomed for the next levels.
The members in the top right box – high performers with low values – remained a challenge to their respective managers and the organization.
Limitations of Performance Values Matrix
- The Performance Values matrix is an excellent tool. However, it is useful for middle management team members and those who are in the system for a long period.
- The PVM model is not applicable to the frontline workforce which has low residency (average stay is about 2 years).
- A vast amount of time is required to build an employee steeped in the organization’s value system.
- Focus on value and less on performance. Values are very critical, so also the ability of the employee to perform the role.
We need a performance management system that focuses on the frontline teams as they constitute the largest group of employees, have high turnover, and face challenges unique to the market in which they operate.