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Jack Welch was the CEO of General Electric from 1981 to 2001. Under his leadership the GE stock went up by 4,000 per cent, making it the most valuable company in the world. Fortune named him the ‘Manager of the Century’ in 1999

Suzy Welch is a former editor of Harvard Business Review. She is also the co-author of Jack Welch’s latest book Winning

You can e-mail Jack and Suzy Welch questions at winning@nytimes.com

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I really support differentiation, ranking employees into performance categories of top 20 per cent, middle 70 and bottom ten, and then managing them 'up or out' accordingly. But don't companies face all sorts of resistance when they try to implement this system?
– Yoshihisa Tanizawa, Kuala Lumpur, Malaysia

Resistance may be too soft a word. Yes, differentiation has its advocates – and even its hardcore devotees – but no other management practice that we talk or write about ignites the same firestorm of controversy.

So thanks for asking about it. Your question gives us a chance to sort differentiation myth from reality. Done right, differentiation is, for instance, 'rank and yank', with its purported public firings of stunned victims once a year. Nor is it cruel, corrupted by favouritism and culturally inappropriate.

What is it, then? Very simply, differentiation is based on the principle that the team with the best players wins. If you don't agree with that, then differentiation will never make sense to you. But if you do, then differentiation provides a methodo-logy for making that principle spring to life.

How? By rewarding stars in an outsized way, in their souls and their wallets, in order to retain and energise them; by actively developing 'the middle 70' with training and coaching; and by moving out bottom-tier performers so that better talent can be brought in. Basically, differentiation is a way to build meritocracies and continually raise the performance bar, increasing a company's competitiveness with every upward notch.

So why does it spark ‘all sorts of resistance’, as you so accurately suggest? By far, the most common reason given is that differentiation is cruel. But we'd make the exact opposite case. Look at it this way. Because of differentiation's performance appraisals, people always know where they stand. May be the news is not always good, but it does allow them to control their own destinies.

Now, the 'yank' myth of differentiation is that the bottom ten per cent are summarily fired. In reality, that's rare.

More typically, when a person has been in the bottom ten per cent for a sustained period of time, his or her manager starts the conversation about moving on. Occasionally, of course, an underperformer doesn't want to go. But confronted with the cold reality of how the organisation views them, most people leave on their own accord, and very often end up at companies where their skills are a better fit and they are more appreciated.

Moving on to resistance reason number two: that differentiation spawns favouritism. The top 20 per cent, it's said, will always be the boss's insiders and pals. To which we say, it's possible. But favouritism is a risk in any evaluation system. At least differentiation's performance reviews, which require quantitative relative assessments of team members, are a countervailing force.

A third common criticism of differentiation is that the continual removal of the bottom ten per cent eventually forces managers to push out perfectly good employees, and thus pits people against one another. But if that thinking is right, why do championship teams replace the bottom of their roster every year?

Because the best organisations, in business as in sports, believe that performance can always improve. And everyone knows that teamwork is part of what makes someone a star.

The final reason people resist differentiation is that, even when they see its appeal, they believe it won't work in their company's unique culture. And what culture is that? Well, we've heard this objection from people at companies small and large, Japanese, Swedish and Mexican companies, growing companies and shrinking ones too.

But in reality, we've seen that differentiation implemented everywhere. In some situations, it just takes more time, or, because of labour laws, it costs more to let people go. But differentiation should never be rushed, anyway. Full-fledged implementation cannot – and should not – occur until an appraisal system has been up and running for about three years. People have to get used to candid feedback and the concept of pay for performance.

Now, we're certainly not going to claim that differentiation is perfect. Every management practice has flaws. But we know of no better way than differentiation for companies to build great teams. And neither, we have found, do its critics.

How can a low-level employee initiate change in an organisation that has stuck with the status quo for a long time?
– Name withheld, Nairobi, Kenya

You can't. Or, 99 per cent of the time, you can get killed trying. Look, most organisations these days understand the need for continual change. They accept the fact that if organisations don't constantly improve the way they do things, they will be lost in the competitive dust. They also know that people generally resist change and have to be goaded into it by a passionate change agent with a loud rallying cry.

But it is a rare company that wants that rallying cry to come from the mouth from a junior player without dirt under his nails and sweat on his brow. Which is why at most companies, change initiatives are led from the top, or at the very least, by middle managers who have earned their stripes with years of great results.

So if you want to change your organisation, follow their lead. As an individual contributor, don't just deliver – over-deliver. Do what is expected of you, and more. Work hard to make your boss smarter and her life easier and your whole team's performance look better than ever. It may take some time, but eventually, you will be rewarded with a team of your own. You can then make it a model for the kind of change you imagine for the company. And if that effort succeeds, eventually you will win the respect, authority and higher-level positions you need to initiate the kind of wide-scale change campaign you so desire.

If our work-and-wait answer leaves you frustra-ted, then perhaps you need to move on. Next time, though, join a company you love as it is, not one you want to make over, especially from the bottom up.

I work for a manufacturing company where the IT department reports to the head of finance. He never has time to evaluate IT projects, so it ends up that IT, which has no representation at the board level, gets attention only when there is a burning issue. This is a problem, isn't it?
– Name withheld, Harare, Zimbabwe

It sure is. In fact, that sound you hear is the collective groan of hordes of people, just like you, who have watched this dysfunctional dynamic play out in their own orga-nisations. The CFO can, and very often does, wield too much influence within companies. And if not the CFO, it's the so-called chief administrative officer who gets this type of excessive power, overseeing finance itself, human resources, and any number of other staff departments.

The person holding the CFO or chief administrative officer title inevitably becomes the company's mandatory go-to guy. They are bodyguards through whom every question and decision must pass before finally making it to the CEO ... or not. Their jobs become catch-all bins for projects, people, or whole departments that the overburdened CEO with just too many direct reports, is said to be too busy to deal with.

It's just wrong. So why does it happen? With IT, the explanation is easy: It's a historical hangover. Initially, IT was mainly seen as good for lowering the costs and increasing the efficiency of payroll oper-ations. In those days, decades ago, there was some logic to having IT report to the CFO. Most good companies, however, took IT out of finance when its broad strategic utility became obvious. But some – apparently including your company – have not.

As for HR reporting to a chief administrative officer, there actually can be no good explanation. With its critical role in hiring, appraising and developing people, HR is so central to the success of a comp-any, it's practically criminal if it doesn't report directly to the CEO. When it doesn't, you can only assume it's because the CEO doesn't get the people thing or someone else is running the place, or both.

Which brings us to the consequences of this whole dynamic. The first is that front-line IT and HR managers, who usually have among the most relevant ideas and information in the company, do not get heard high enough up in a timely way. Second, companies where the CFO or chief administrative officer reign supreme have a much harder time attracting good people to top HR and IT jobs. The best and brightest in these fields will always choose to work where they have a seat at the table equal to the CFO.

So, to your question then. IT shouldn't be reporting to the CFO. Nor, for that matter, should any key function report to a bureaucratic layer. Your painfully common problem is case in point.

Are consultants good or bad? Under what circumstances would you bring them in? And what does bringing them in say about the skills of your people?
– Kendra Stringfellow, Albany, NY

Your question is sort of like asking, 'Are doctors good or bad?' The answer is: Some are good and some are bad. But either way, you want to spend as little time with them as you can.

The problem with consultants is they're fundamentally at loggerheads with the managers they want to work for. Consultants want to come into a company, solve its mess, and then hang around finding and solving other messes ... forever. Managers want consultants to come in, solve their specific problem fast, and get out ... also forever.

There are situations when consultants are useful. Sometimes a company needs fresh eyes to assess an old strategy or a new product or simply does not have the in-house skills needed to make an informed decision. Private equity firms today use consultants effectively to quickly evaluate the markets and industries of potential acquisitions. But the best bywords to keep in mind when considering hiring consultants are: 'Be careful'. Before you know it, they could be doing the ongoing work of your business. After all, that's what they want, even if you don't.