General Electric Co. is scraping its much-imitated employee rating system as the 124-year-old manufacturing giant overhauls performance reviews in favor of more-flexible options.
The decision to scrap the five-point scale which has been used for the last 40 years, where employees were rated in five categories — ranging from “role model” to “unsatisfactory” — as part of their annual review, follows a pilot program involving 30,000 workers.
GE’s annual performance reviews— a cumbersome series of self-evaluations, formal write-ups and ratings by managers, plus approvals of those rating by bosses— could take as much as five months to in total to complete.
A new performance management system asks employees and managers to exchange frequent feedback via a mobile app called PD@GE, in person or by phone. The messages are compiled into a performance summary at the end of the year. The move, taking a cue from Silicon Valley, was part of a broader overhaul of the company to become more nimble and to streamline decision-making.
For GE, a longtime standard-bearer for corporate management, the shift reflects the realities of a new work climate in which employees expect more feedback from bosses and peers—companies, in turn, expect employees to act quickly on that feedback.
Companies such as Accenture, Adobe Systems, IBM, Microsoft and Dell have also done away with annual performance reviews.