Scenario 1: General Electric and Rank and YankWhen Jack Welch was appointed the CEO of General Electric (GE) in 1981, he made a numberof changes. Over time, GE grew to be one of the largest and most valuable companies in theUnited States. One of the earliest programs Welch introduced was a ranking-based performancemanagement system, often called Rank and Yank. In short, each year when managersconducted their annual performance reviews of their employees, they ended by ranking them bestto worst. Managers were required to rank 20% of their employees in the Top 20 (the mostproductive workers), rank 70% in the middle (the vital 70 who meet but do not exceedexpectations), and rank 10% of their employees in the Bottom 10 (these were the one who didnot perform well or had performance issues). Those in the Bottom 10 were typically fired. Welchfired thousands of workers in the first few years. The system worked well for GE at first because it had more employees than it needed at thatpoint in time. Eventually though, this system caused problems. First, many of the managers wereevaluating employees from very different working areas, and it was difficult for them to comparethem to one another (it was like comparing apples to oranges) and to rank them. Second, somegreat employees ended up being fired for reasons outside of their control, such as a toughcustomer market or strategic decisions made above them. Third, managers often ended up firingpeople not because they didnt perform well, but because they didnt promote and market theirperformance to upper management. Fourth, those in the Top 20 received stock incentives andbetter rewards, and once they got used to those rewards they didnt want to let them go, so theywould waste time trying to make others look worse than them so those others would be rankedlower. Fifth, sometimes managers would hire people they know would underperform, just sothey could fire them and protect their other workers. This ultimately led to good people leavingand other issues arising in the culture of GE (e.g., hypercompetitiveness). Ranking-basedperformance has been used in a number of organizations since then, including Microsoft,Amazon, IBM, and others. It often ends up producing similarly negative effects.What could GE do to improve their performance management process at each step. What could GE do to improve on Step 1 (define performance) of the performance management process? What could GE do to improve on Step 2 (monitor & evaluate performance) of the performance management process? What could GE do to improve on Step 3 (review performance management process? What could GE do to improve on Step 4 (provide consequences) of the performance management process?