Performance Appraisals being discontinued?
The most recent issue of Business Week (Jan 9 issue) has an article titled The Struggle to Measure Performance. It explores the topic of whether the traditional performance appraisal and rigid rankings are hindering teamwork and risk taking needed for innovation. Apparently, corporations are questioning what is the right method for rewarding performance in the current business environment.
GE's 20/70/10 ranking system was specifically mentioned as being revised to allow more flexibility and management judgement in the rankings. The rankings are now considered guidelines and the low achievers are now rated "less effectives" and provided coaching rather than a pink slip. The article also goes on to say that these changes are needed as GE tries "to evolve its culture from a Six Sigma powerhouse to one that values innovation".
Studies indicate that forced ranking, including firing the bottom % is ineffective after the first couple of years. It also forces people to focus on short term results and competing rather than collaborating with each other. The article does not imply that performance appraisals are being dropped but that changes are needed. The biggest hurdle appears to be how to reward top performers so they don't leave.
None of the revelations are probably new to quality professionals but it will be interesting to see if changes are really made.
Bill Pflanz