Another corporate giant ditches performance reviews

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HR thought leader General Electric is joining the growing line of companies looking to make the traditional performance review a thing of the past.
Following names like Accenture, Adobe and Gap, GE is trading its annual performance reviews for more frequent conversations and feedback.
The Washington Post reports this will include an app to help managers and teammates share feedback and the phasing out of performance rankings.
Statistics from the Institute of Corporate Productivity show that about 10% of Fortune 500 companies have already canned an annual ratings system.
However, GE’s move is being seen as a bellwether for corporate America, given that it was one of the most avid adopters of annual ratings in the past.
The company has in the past assigned rankings annually to employees based on performance, and aggressively cut poor performers from its flock.
Corporate Executive Board HR practice leader Brian Kropp told The Washington Post GE’s move would reverberate more than Deloitte or Accenture.
“If a company like GE were to make the transition, that would really be powerful,” he said.
In fact, it could dramatically escalate the number of companies looking to end annual ratings, according to Corporate Productivity’s Cliff Stevenson.
"The snowball has started rolling. I would not be surprised to see next year when we do the large survey again that it may jump into the twenties,” he said.
Technology is being given as one reason for the trend, as younger workers demand more instantaneous feedback on their ongoing performance.
The pace of change means annual goals may no longer be relevant by the next quarter, with companies now paying more regular bonuses.
GE HR executive Athena Kaviris told The Washington Post the company was ensuring that any feedback given wasn’t ‘old news’ by that time.
Also, companies have realized performance reviews are sapping managerial time and costing money, as managers are now responsible for more direct reports.
Embracing new performance technology and analytics is expected to enhance the amount of information available to HR, create more targeted programs for developing staff, and eliminate elements of managerial review bias.
  • Doug Jordan on 2015-08-25 9:52:23 AM

    "companies have realized performance reviews are sapping managerial time and costing money, as managers are now responsible for more direct reports." Um, and this valuable management time would used where?

  • DSC44 on 2015-08-25 10:39:07 AM

    Buyer beware.

    Having talked to a number of the firms who have ventured this way the elephant in the room remains compensation. Only one has delinked compensation successfully. The rest have not and that is not 'talked' about in all the reports on what firms are doing.

    The result is a 'shadow ranking' system, as it is called by many of the employees. This has resulted in maintaining levels of distrust among employees when the shadow system is not transparent.

    When a company can show how they have eliminated the connection between comp and the annual review there will be a brake through. Right now it is mostly the same under another name.

    But it is something worth trying to achieve.

  • Sherry Knight on 2015-08-25 11:21:38 AM

    Very True - it is far too long to wait to give positive or negative feedback in a once or even twice a year performance evaluation. However, if performance evaluations were used to plan goals, that makes it a valuable tool.

    We have been telling our clients for a number of years to disengage from yearly performance reviews to provide immediate feedback so employees can keep on top of their game - and this puts more money in an employers pockets because people strive to be good at what they are doing.

  • Mike on 2015-08-30 6:41:51 PM

    Let's not get things mixed up here. While the firing of the bottom performers caught much of the headlines, it is generally accepted that GE re-acquired its "greatness" by aggressive use of performance reviews that were pertinent to performance. In fact, what it did was force managers to do their jobs they were supposed to do in the first place: manage your people by providing feedback that is useful and constructive. This new move is a logical next step because it reduces the formal time spent on these much-disliked reviews and replaces them with specific and timely feedback that can (should) be more useful and constructive. One concern of mine is that very few of my managers have been involved enough to provide such timely and useful feedback. Also, how will this be used (or documented) at raise time?

  • paul on 2015-08-26 8:13:29 AM

    Have long implemented a 'system' which used both. Proper record keeping which annuals seem to encourage. - especially with bonus payouts - is needed for promotion and other applications. But regular on-going feedback builds better performance. Alas, the real reality seems to be, even where I work in GE, that most managers think about developing people last.

  • Cory Tymchuk on 2015-08-26 8:20:22 AM

    This has the look and feel of a soccer field full of 7 year olds where everyone gets a participation ribbon after an hour of play. But this is GE - so my observation has to be way off base. What is GE implementing in its place to more easily measure instantaneous performance no longer tied to annual goals?

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