JD's Journal
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JD's Journal
Beyond the Bell Curve
Performance management frameworks shape organizational culture in profound ways. Looking beyond traditional models, this episode dives deep into the evolution of how companies evaluate, develop, and sometimes dismiss their talent.
We begin by examining two competing philosophies: the belief that shedding low performers naturally improves an organization versus the conviction that every employee can contribute effectively in the right circumstances. Jack Welch's famous "vitality curve" at General Electric—the 20-70-10 model that advocates removing the bottom 10% of performers annually—revolutionized corporate America's approach to performance management in the 1980s. Yet surprisingly, many organizations that embraced this model, including GE itself, have since abandoned it.
The podcast explores Netflix's nuanced "keeper test" approach and highlights the fundamental problems with forced ranking systems: they create fear-based cultures, stifle innovation, and fall prey to unconscious biases that may incorrectly identify who truly adds value. Perhaps most telling is how many "underperformers" go on to thrive elsewhere after being managed out—suggesting the issue might be role alignment rather than capability.
The most fascinating segment examines NextJump's revolutionary approach: a "no-firing for performance" policy implemented in 2012. Their philosophy—"if you wouldn't fire your children for struggling, why treat employees differently?"—has created extraordinary psychological safety, higher retention, and a culture where vulnerability and development flourish. Harvard Business School has recognized NextJump as a Deliberately Developmental Organization, where employees spend substantial time on personal growth across multiple dimensions.
As workplace transformation accelerates through layoffs and AI disruption, understanding a potential employer's performance philosophy becomes crucial. Before accepting your next position, ask: do they operate on a bell curve with attrition targets, or are they genuinely committed to developing all their people? The answer may determine not just your job satisfaction, but your long-term wellbeing and growth potential.
Hi, folk, and welcome back to the JD's Journal podcast. As always, it's so good to have you here. Well, today I want to kind of explore the topic of the evolution of employee performance management frameworks. These things are most relevant in large enterprise organizations, like many that I've been involved in in the past, and at a high level. There seems to be two distinct philosophies that I've seen adopted One which assumes that you continuously shed the kind of lowest performers, the bottom end of your organization, to raise the quality of your workforce and kind of naturally improve the quality of your organization by kind of stripping out the low performers and then hiring in new performers, the perception that you kind of run it like a conveyor belt as you improve the organization. The other philosophy really is the belief that all employees can be effective contributors in the right circumstances, and for those that know me, that have known me as a leader, you'll know that my beliefs are more aligned to the latter approach. There, as in my experience, is that every person has the potential to be a valuable contributor to the organization in the right circumstances, in the right situation, and I think both mindsets have their place. But one thing that I've always felt is that like nobody gets out of bed in the morning and feels like I'm going to be mediocre today or I'm going to fail today, or I'm going to underperform today. I think every human being, frankly, has an intention, or at least a hope, to deliver value and to deliver impact and to be able to go home at the end of the day and feel respecting themselves as having accomplished good things during the day, and so that's my fundamental belief. But, as I said, I think both mindsets have their place and so forth. Now Amazon, the company that I've just left recently, continues to utilize what was the Jack Welsh General Electric model, which is a bell curve or a vitality curve, as Jack named it. And as I was preparing for this episode, it was quite interesting to me to see other large companies, like Ford and Microsoft and Adobe, and even General Electric now, where they've ditched that model. It was born out of General Electric under Jack's leadership, but they've actually moved on the different models, and I'll talk about those in a little while as well.
JD:But let's look at the origins of this. So, back in the kind of 1980s, jack Welsh incredible entrepreneur, very successful businessman leading GE established this notion of a vitality curve, the notion of the kind of 20-70-10 model where the top 20% of your organization are the high performers and they're rewarded and promoted based on that. And it's this kind of belief that the top 20% of organizations will be the most impact, the middle kind of solid contributors. They're coached for improvement but they're still a value to the organization and you continue to invest in them. And then the bottom 10% they're consistently underperforming and they get managed out of the organization on an annual or a semi-annual basis. And on an annual or a semi-annual basis and you know, welsh's perspective was that it worked within General Electric because they'd spent years kind of building a culture of candor and accountability where there was feedback, and his argument was that to keep low performance in the organization was a kind of false kindness that ultimately harmed both the organization and the individual. And there's some truth to that. You know, there's definitely been situations that I've observed as a leader in my own life where people have been allowed to continue in a role where they were not delivering particularly great results and as a result of that, again they were not delivering for the organization great results and as a result of that, again they were not delivering for the organization. But they also, you know, we know we're going home at the end of each day not having achieved what the goals they wanted to achieve and so forth. And so I guess let me be really clear.
JD:I know I made a point earlier in the podcast that I'm not a believer, or not a strong believer, in this approach, but I am a strong believer that if a situation isn't working, you should change it. But I am a strong believer that if a situation isn't working, you should change it. So, you know, while Jack tended to use terms like the C players and the rank and yank and, I think, some kind of not so pleasant terminologies in the early days, we've seen the vernacular, the terminology of unregretted attrition being adopted more broadly through the organization in these environments. So this notion of attriting people out of the company but not regretting that they were leaving, as opposed to when your high performers leave the company, which is definitely a regretful situation. So this distinction is being done there. And so while Jack started this, we did see the adoption of this model by companies like Amazon and Ford, as I mentioned earlier, and Adobe and quite a few others.
JD:Netflix uses a model that's kind of similar but different. They call it the keeper test and it's really the basis of the keeper test is would a manager fight to keep an employee? Keeper test is would a manager fight to keep an employee, you know, if, if they feel that the employee would be worthy? So if a person on my team came to me and said that they were leaving for another job, would I fight to keep them? If the answer to that question is no, then that probably signals that the employee may not be a top performer for the role and the managers encourage to consider parting ways or letting them move off with some kind of generous severance package, some kind of generous package that makes it financially attractive for them to go their separate way, and so forth. And again, that's not dissimilar from models that other companies are using as well. When they get to a point where they decide to want to move forward, with an unregarded attrition typically coming with, that is some kind of financial incentive to encourage the employee to move on and that makes way for them to hire in somebody new in the organization. So within again, I'll talk to Netflix.
JD:Within Netflix, the way that it works is that there's frequent manager self-assessment, as opposed to the annual review process that exists in other organizations. There's ongoing feedback culture in the organization which really underscores Netflix's philosophy of extraordinary candor, this kind of constant, honest, critical feedback amongst peers and from managers to ensure that the feedback is there and that nobody's caught unaware. And then the notion of, instead of moving into a long performance improvement plan, but if, once that feedback is coming back, that the person isn't worth fighting for as the language they use, then to move to a severance package and a separation and so forth. And so I think it's kind of, as I said, it's a kind of nuanced approach to the one we saw coming out of Jack Welsh's design. Now, in all those designs there is criticism.
JD:It's not universal support for these by any stretchy imagination, and some of the feedback, for instance, or the criticisms and risks are that it creates a culture of fear, that this is notion of kind of constant evaluation, which can make employees feel quite anxious, and this notion of of the employees being disposable, like if you're you know, if somebody views you as not being critical organization, then you're basically thrown out or encouraged to move on, and so that that kind of you know impacts the kind of sense of stability, in the sense of of being, you know, in a stable environment. Along with that there, um, there's a notion around kind of psychological safety concerns which might stifle risk taking and might stifle innovation, which which obviously for an organization like netflix or amazon or microsoft, you know, innovation is critical. So if that's not managed in in the right way then that can be problematic. Um, and you know, as you would expect, there can be biases and equity issues that go along with all of that, which we'll talk more about in a minute. So, looking at those kind of nuances on Jack's model, then you know he kind of remained right through this, even as he'd stepped away from GE and moved out of. He kind of remained right through this even as he stepped away from GE and moved out of management roles completely.
JD:In his 2005 book Winning, he still underscored the 20-70-10 model. He still believed that it was the right model and essential for building great organizations. He didn't see it as a harsh approach at all. He thought it was the best way to reward excellence and to drive improvement and so forth. But it is interesting to watch how many companies that did in that early era adopt the model consistently. I know I worked for Microsoft and the bell curve was a big deal when I was at Microsoft, no question about it, to watch those companies that have moved away from that model.
JD:And if I can share my own very strong personal feelings on this model, you know, I think that frameworks which are driven kind of rigorously, based on top-down dictated targets for ratings and managed attrition, I think they create again an environment of insecurity in the workforce. I think that they are open to manipulation and targeting as a mechanism to meet those rigorous targets. And I also think that biases and ignorance can influence poor judgment in the decisions that are made, you know, and all of the typical conscious and unconscious biases come into play. You know things like recency bias, where somebody you know around the time of evaluation has done something good and then you basically your memory is, oh, this person's a high performer, or perhaps there's someone that's remarkably different from you in terms of their style or their culture and therefore, again, knowingly or unknowingly, you look at them differently and you evaluate them differently. And of course, examples like if you've got somebody who is an extrovert, who is adept at promoting their successes, being compared to somebody who is an introvert, a quiet achiever, you know there's a high risk that the person that you evaluated because they're not as vocal maybe in fact be delivering more impact to the organization, more results to the organization, than you're aware of, and therefore there's a very big risk that the wrong appraisals are happening in that situation.
JD:I think it also needs to be acknowledged that you know we are human. We balance work and home and our own personal lives. We're somewhat biorhythmic as well. We go through periods of kind of high performance and periods where we're not peaking. You may be dealing with an employee that's handling external distractions or external burdens maybe the health of a loved one or marital problems or financial problems which are impacting their focus for a period of time, but not necessarily in the long term and so you may make decisions, particularly given that these performance programs are typically time boxed. You know you have an evaluation cycle that's kind of a six monthly cycle or 12 monthly cycle, and targets to achieving those cycles.
JD:If you've got an employee who's been a valuable employee for most of their tenure but they're going through a period right now of life change or challenge or whatever, there's a high likelihood that you'll have an employee that you managed out of the organization who, once they work through that could return, or could have returned, to being that high performance contributor that they were. But that boats kind of sailed and along with that you know. I think that the risk that goes with this notion of managing people out of an organization on a cyclic basis is there's also a likelihood, as you manage out those people who've got tenure, that you're losing knowledge you're using, losing company knowledge and experience and kind of the the tribal knowledge that's been gathered through tenure and okay, so you're hiring in new, fresh blood and they may be super high performers when you hire them in, but if you're constantly churning out the people who have a long tenured, how much of the history are you losing and how much risk are you creating for repeating mistakes that have been made in the past because you no longer have that legacy information available to you? So that loss of valuable knowledge and context and history and so forth. I don't know how to evaluate that, I don't know how to put a measure on that, but I think it's an incredible risk for certainly some of these large, longstanding organizations that they lose information and, interestingly, maybe going along with that, in multiple companies that I've worked for that have had this kind of notion of managing people out based on poor performance in a period. I've always been really fascinated to see how many of the employees that were managed out the door, who were moved out of an organization, have gone on to have incredibly successful careers with other companies. You know, sometimes to the juxtaposition that I'm almost envious of the organizations that hired them after I managed them out or after we managed them out. You know, we've moved some talent out of the organization and they found their feet again and they're doing remarkable things and, damn it, I wish they were doing those remarkable things for me. So I think you know that, contextually, is something that kind of plays on my mind as I think about these models of churn.
JD:If we go back to GE, as I said, where it all began, ge has evolved its performance management system quite substantially, particularly over the last decade, and the model that they've adopted right now really kind of features, you know, frequent informal check-ins where the managers engage on regular touch points, the kind of agile approach to getting updates in terms of what the employees are doing and how they're serving customer needs and so forth. They've established frameworks and mechanisms for bi-directional feedback. So not just the direct managers, but also, you know, kind of almost a 360 feedback mechanism to make sure there's comprehensive feedback coming through. They have focused on coaching over rating. So basically the feedback is kind of categorized as continue to do this or consider this or other constructive feedback kind of styles, as opposed to judgment, as opposed to critical or criticism. It's more about let's think about how you can kind of raise the bar on how you're working and so forth.
JD:Then, finally, the implementation of what they call snapshot summaries instead of ratings Rather than a numerical score. Managers provide kind of quality feedback and interview summaries which you know, allow the employees individually to understand their achievements and understand their development areas and their contributions and so forth. And the impact that they have seen from this is a mind, mindset shift from a controlling kind of culture to a culture of connection. And for those folks that recently you know listen to my engagement podcast episode, we know that there's a correlation between performance, productivity, retention and employee engagement. And I look at what I think I see connection here. That's what I see. See, I think I see a move of an organization to a far more engaged style of working with their employees. Um, and through that, you know, the, the feedback from the the folks who've adopted this model in ge is that it's providing a a richer, more meaningful set of conversations and morale improvements and collaboration improvements, which is ultimately translated into an increased level of retention of their staff. So that's kind of, I think, what we're seeing in that kind of evolution.
JD:But I kind of want to go a little bit further than that and I asked the question what would it look like if an organization made the decision to avoid firing employees for performance-related concerns? Completely Like, what if you never fired employees based on performance? Certainly you would fire people if there were conduct issues or issues that went beyond policy and so forth, but if it's purely performance, what if you had the courage to say we're going to retain and develop those people? What if you had the courage to say we're going to retain and develop those people? And it was reading Simon Sinek's book Leaders Eat Last he talked about an organization called Next Jump, who are a tech company and they've adopted quite a radical commitment to employee development and retention where, rather than terminating underperformers, they've adopted a policy of not firing, apart from, again, ethical violations, conduct violations and so forth.
JD:And their kind of philosophy is that if you wouldn't fire your children for struggling, why would you treat your employees differently than that? So, instead of letting people go, they've invested heavily in leadership development and personal growth programs and coaching based on the belief that most performance issues stem from either poor leadership or misalignment of person to a role. My comments previously I still believe that everybody can be performant in the right situation and they've effectively underscored that and implemented that model, that mental model, within their organization. So, while NextJump has evolved over time, their core values continue to be around employee safety and development and they continue to drive this kind of notion of leadership circles, for their emphasis on creating a circle of safety a concept that Sinek actually talks about in the book to describe environments where people feel secure enough in the work environment to really thrive. And so if you look at the work that NextJump has done, they've adopted a kind of core philosophy that they call better me plus better you equals better us.
JD:So kind of expanding on that a little bit, better me they describe as basically the employees are working on personal growth, emotionally, mentally, physically and spiritually, really growing in all of the ways that they can as employees. And then Better you is about the employees helping others grow through mentorship and feedback and collaboration and support. And then Better Us is this notion that the organization thrives as a result of collective development, the individual developing themselves, development, the individual developing themselves, their peers supporting and developing them as well. That equals, basically, a better organization. So the kind of notion then is a lifetime employment policy, and they implemented this back in 2012. And the policy explicitly commits to not firing employees for performance issues. Instead of termination, employees are offered coaching, role changes or skills development.
JD:And if an alignment isn't found, then Next Step have gone a step further, where they will then say look, if we can't find the right role, the place where you can really thrive, where you can fire on all cylinders, then we will work with you to help you find your next role externally, both in a respectful and a supportive mindset. And so you know, think about, like, just imagine what that means in terms of the level of trust, the level of psychological safety that an employee in that environment will have To have an explicit commitment coming from your employer that says we are going to do everything as an organization to have you be successful, with right resources, right role, right training, right mentorship and so forth. And if all of those things don't work out, then we're committed to you enough that we're going to work with you to help you transition to another organization where you can be successful, hopefully in that organization Hopefully they don't have the other performance management model that will have you managed out Anyway. So Harvard has recognized NextJump as one of the few organizations in the world that has what they call deliberately developmental organizations or DDO, and in that sense the employees spend 50% of their time basically focused on personal development and again, the focus being physical, emotional, mental and spiritual and and tools that they use to support that are what they call talking partners or buddy systems to provide daily feedback, situational workshops where they use role play to work through real life challenges and so forth, and then kind of again 360 anonymous feedback, peer-to real life challenges, and so forth, and then kind of again 360 anonymous feedback, peer-to-peer feedback, and so forth, and the thing called eggshell updates, which I really love, this whole notion of eggshell updates, which is kind of sharing what you're afraid to talk about, a safe place to be able to talk about the things that you don't feel like you would normally want to talk about.
JD:So some of the cultural practices that go with this that I think are quite interesting is there's no HR department, like everybody in the organization, is sharing responsibility for culture and people decisions? Is sharing responsibility for culture and people decisions? Imagine that they what they call hiring for humility, where they prioritize coachability and emotional intelligence over raw talent. You know, and again, my interpretation of that is that we hire people in the organization who have the integrity and the vulnerability to listen and to learn and to grow as a result of that Transparency and vulnerability. So employees are encouraged to share struggles openly, without fear of judgment or job loss. And again, given the philosophy they'd adopted, it's far more likely that an employee is going to be willing to say, hey, I'm struggling or hey, I don't know what to do here, I'm not sure what I need to do or what the steps are, and so forth. Can you help me? On the physical side, they provide onsite gyms and healthy snacks and fitness tracking is kind of one of the things they do.
JD:As part of the culture, the work is deliberately kind of purpose driven and they've taken on healthy initiatives like adopt a school and code for a cause and and other things. And again, I've talked previously in other episodes about the, the very well known and very well recorded um uh impact, both psychological and physiological, that giving has, and so they're. They're leveraging that um uh that to help nurture and grow their organization and kind of contribute to the psychological and spiritual health of the organization. The impact that they've seen is that their retention rates do exceed industry norms. Employees are reporting significantly higher satisfaction engagement levels than most organizations. And we've seen other organizations, like the US Navy and some Fortune 500 companies and so forth, who've basically taken the model that's come from NextJump and adopted it for their own or adapted it for their own organizations and so forth. So I'm, you know it's one, it's a model I'm going to be monitoring and following for some time to come. I think it's fascinating that to have an organization that's had the courage to do this, but again, it's been in place since 2012. So they've had plenty of like time to really test this and be satisfied that it's delivering for the organization.
JD:So if I think about the kind of comparison between you know, jack Welch's vitality curve and NextJump's retention model, if I compare this on a number of different factors, here's how I would think about it, right? So the core philosophy of the vitality curve is that I rank my employees and I remove the bottom 10%. Every year I wipe out 10% of my organization, or 6% or 10 or 9%, or it happens to be in your organization but it's a percentage organization, whereas next jumps model is that you invest in every employee's growth like every employee. From a performance management perspective. On the vitality curve I've got a 10, sorry, a 20, 70, 10, or whatever the ranking targets are in the organization. That's kind of a forced ranking and I'm compelled top down from the leadership to meet that distribution target for the rankings in the organization. None of that exists in the Next Jump retention model. There's no sense of that ranking model at all and instead, from a performance management perspective, the focuses are on development, coaching and feedback loops.
JD:From an employee safety perspective, the vitality curve really has very low psychological safety for the C players. It has very, very little or no psychological safety for those people at the bottom of the presumed stack in the organization, whereas in the NextJump model there's a high psychological safety culture for all employees, completely everybody. From a retention perspective, the vitality curve focuses on unregretted attrition. So you know like a negative retention is actually a goal, like this unregretted attrition. So you have to see a perceived organization leave, otherwise you're failing to meet the company objectives, whereas under the NextJump model, lifetime employment is the aspiration there, except where there's ethics breaches, as I said. But the Nirvana situation is you hire an employee for life and they stay with you for life.
JD:From a cultural perspective, the vitality curve it drives a competitiveness and a very individualistic culture. It's me against you for survival, and just think about that. You've got an organization of, let's say, 10 people. For sake of argument, one of those people at least knows that they're going to be managed out of the organization, just statistically. And so it becomes quite individualistic. It becomes you know, I have to beat you, I have to basically wipe you out, otherwise I'm going to get wiped out. And so it creates this very competitive, very political culture. Potentially I don't want to help you succeed because that might be to my demise. Whereas, from a cultural perspective, within NextJumps organization, it drives this sense of collaboration, it's emotionally intelligent, it's supportive and winning together, like shared success, is the normal, it's the desired state and it makes sense.
JD:And finally, from a criticism perspective, you know the vitality curve, the observations we made there is, it drives an erosion of morale, it drives bias, it has legal risks associated with unfair dismissal and certain laws around the world, in particularly in places like europe, and so forth. There's all sorts of issues are tied into this, whereas, um, from a next jump perspective, it it is resource intensive, there's no question about it, um, and it's slow at a scale. But we've talked a lot about what the benefits are there and I'm sure you can totally hear where my head is at in terms of what's going to come. So the research that's been done on the two models, I guess the comparisons there is, the vitality curve, outcomes did initially boost performance at GE but quite quickly there was criticism that it was undermining collaboration innovation. As I said earlier, many companies have abandoned the model due to lack of the outcomes they were targeting and also because of legal challenges and cultural backlash. And you know, as I've said before, the studies show that this forced ranking model can lead to internal competition, reduced engagement and higher turnover. On the NextJump side, harvard's DDO research found the development cultures like NextJump. They foster a much higher level of employee engagement, psychological safety and long-term retention, the comfort for people to take risks and be innovative and so forth. And, as I mentioned before, it's been adopted by larger organizations now who see the merit in moving to this model.
JD:It's very difficult to quantify the results of being cheap, because not all the information is available. Not every organization one measures the things at the same level or is transparent about the observations there, but certainly all the indications are that this is where it goes. So, look, that's really what I wanted to cover in this kind of short podcast. I think there's a lot of food for thought here. If you're not familiar with NextJump's performance model, I encourage you to go into a Google search. I'll provide a link to some information as well.
JD:But I think it's fascinating and I think you know, as we are watching what's happening today, as we're watching the large numbers of layoffs that have been happening, and certainly as we've been talking about the potential impact of artificial intelligence on certain roles and the likelihood that we're going to see the displacement of certain functions, at some point in time you're probably going to be looking for your next organization, and if you haven't habitually done this, I would include a question about their philosophy on performance management. If I was going to be looking for a new role with any organization today, it's one of the early questions that I'd be asking is what is your approach to performance management? Are you working on a bell curve? Do you have an attrition, an unregretted attrition target, or are you really committed to the successful outcome of all of your employees and their professional development, personal development and and psychological safety? I think it'd be a great thing to know before you went for any new role.
JD:Anyway, if you've got opinions or or questions on this, I'd love to hear from you. I'd'd love to hear your perspectives. If you've got other company examples that have got performance models that either are awesome or not, I'd love to hear about those as well. So don't hesitate to drop me a note on that. I hope you've enjoyed this episode. Whatever you're doing out there, I hope you're living your best life and please be good to each other.
