The company that brought us “rank and yank”, that diabolic efficiency-driven human-resources practice of culling the bottom 10% of your performers to make room for new talent, has a better idea for us. General Electric, the bellwether of management practice for decades, is joining companies such as Accenture, Adobe and Medtronic in doing away with traditional performance reviews entirely, in favor of more personalised and developmental feedback.
Why? And what does it mean for managers and organisations everywhere?
First, some background. Every company has the same challenge — how to identify who is doing a good job, who is doing a great job and yes, who is messing up. This step is a prerequisite to important leadership decisions around compensation, coaching, and promotions and dismissals. If everyone in an organisation was highly self-motivated and competent, people could probably do this for themselves, but alas, such a utopian state is seldom the case.
Unfortunately, the solution that has evolved in most organisations may well violate the managerial version of the Hippocratic Oath — do no harm. Where to begin?
The problem with reviews
People don’t like negative feedback. This in and of itself is hardly a reason not to do performance reviews; I don’t like going to the dentist but I do it anyways. But it raises the degrees of difficulty.
A big problem is that we think we’re way better at evaluating people than we actually are. The range of biases each of us carries around all day without knowing it can be stunning. We like people who look like us. We like people who worked in the same department we used to. We rate people better when we hired them ourselves than we do if we inherited them. Bottom line: If you think you’re “fair” you’re probably fooling yourself.