At GE in Jack Welch's days, they routinely fired the bottom 10%. Up or out. Welch's rank-and-yank has been documented as, almost without debate, a failure. GE

At GE in Jack Welch's days, they routinely fired the bottom 10%. Up or out. Welch's rank-and-yank has been documented as, almost without debate, a failure. GE still uses some form of it, but not the draconian 10%. The first problem with it is that it's difficult to allocate the firings across divisions. If you do this unevenly, workers and managers in the divisions hardest hit get angry about the perceived injustice. If you do it evenly, you end up firing people in high-performing divisions who might be good employees by the company-wide standard. The second issue is that a company's proportion of deadwood decreases with successive firings. The first iteration, most of the people let go are of negative value to their teams, and few people miss them. Second iteration, some mediocre performers are fired, but managers would rather not let them go because they're still of positive value to the team, and their firing means that those remaining have to do more work. Third iteration, it's impossible to find enough deserving people, and hell breaks loose: managers get pissed off about being forced to can good people, and line workers get angry when they see respected colleagues depart.