Apparently General Electric is getting rid not just of its "Stack Ranking" management style (where the annual review fired the bottom 10% of performers rigorously)--but, in the age of millennials, may be getting rid of numeric rankings altogether. The idea--practiced for a while by big firms like Microsoft and Yahoo (and presently being abandoned)--forces managers to grade everyone on a bell-curve. The top 10% get bonuses. Eighty percent maybe get a set of steak-knives (not actually). The bottom 10% are let go.
This is now seen as obviously a bad idea:
Singling people out as "poor" — or the diplomatic Yahoo version, "occasionally misses" — and making them fear for their jobs doesn't inspire them. It scares them. And forcing managers to name a certain number of people as poor performers, even if they don't feel that way, makes them miserable.If you are wondering how this isn't obvious, The Omnivore will explain a few things.
Hey, It Worked For Me!The first thing you have to realizes that for anyone in top-management, almost axiomatically, the system worked for them. To someone who has good boss-relations (say, naturally charismatic?) they are going to find the methodology easier on them than someone who has difficulties with the system--even if those difficulties are not directly related to performance.
The natural selection process will select people for whom the system seems fair and good. This reinforces it at the top--even when the evaluation is not objective.
Your Goals SuckExecutive-style jobs are usually not measurable in objective ways. People have tried desperately to find ways to "grade programmers" on number-of-lines-of-code (even places that ought to be smart enough to know better). Goal-setting is practiced widely at many large companies and goals are often just an exercise in guess-work (what The Omnivore had had to do for the year was usually NEVER clear in February--but trying to change goals mid-year or so feels like an exercise in gamesmanship).
The idea of SMART goals--which are almost always, at the higher level, set by employees--gives the fiction of measurable metrics--but really measurable metrics are often non-rigorous under the hood. As such, attempts to grade employees on how often they meet their requirements is usually just grading them on how well they or their boss established requirements.
Missing Deadlines is Often A Matter of LuckIf you have to work with a team external to your division--and they're assholes--you can miss deadlines (often the only really objectively tracked metric in evaluations) through no fault of your own. The proscribed solution, time-tracking and escalation, just puts your boss in the middle. Anyone who has ever heard "Don't come to me with problems--come to me with solutions!" knows how well THAT goes over.
Putting a red-metric (a miss or expected miss) on a executive scorecard is a good way to get beat up--no 'messenger' gets spared in a performance-focused organization--no matter how badly "performance may be measured"--so you do everything you can to avoid that. This includes, of course, lying.
The Incentives Become PerverseFormer GE CEO Jack Walsh said this:
“Yes, I realize that some believe the bell-curve aspect of differentiation is ‘cruel,'” Welch wrote. “That always strikes me as odd. We grade children in school, often as young as 9 or 10, and no one calls that cruel. But somehow adults can’t take it? Explain that one to me.”Well, Jack, The Omnivore is here to help. In young kids, grading may be painful and stressful--but it doesn't approach fear of losing your job and having your family out on the street. You also don't get paid based on relative performance: in most schools everyone can get an A if they work hard enough. In your schema, Jack, if someone needs money and there's a better performing peer, the incentive becomes competition. Competition becomes hate when real damage is on the line. Hate leads to sabotage (ask Yoda).
Sabotage may not be outright warfare (or even clandestine attempts to do damage)--but can lead to lack of cooperation, refusal to share information, or just not speaking up when a peer sees something going wrong. These are all things Jack probably sees as reasonable on the quest to world domination--but f you wind up rewarding assholes eventually you get a top-of-the-pyramid that's full of assholes.
You've bred for them.
The Evaluation Process is OpaqueThe compounding problem is that the evaluation process is usually opaque and decisions about scoring happen in a nothing-leaves-this-room meeting of managers. The employee comes out with a score--but little idea at how it was arrived at. Since you usually don't know other people's scores, you know that if you got an average review ("A Three") that there was probably--very likely--someone who got a good review ("A Two") and you are left to speculate as to why.
If there's a lack of an obvious super-star on the team, the speculation won't be good.
The Omnivore's workplace (a big corporation that has problems--but thankfully did not fire people nor, in general, force poor reviews--although they are encouraged) has consistent problems with poor morale scores on the "anonymous" employee reviews. This results in a perpetual working team to try to improve them.
Inevitably this comes back to the most anodyne of all possible solutions: More Communication from the top. This, frankly, is bullshit. What would help is (a) a consistent cost-of-living-increase (even a small one), more-than-once-a-year employee rewards (say a $200 Amazon Gift Card given quarterly for people making six figures), and a non-yearly review for problem-performers (i.e. have the discussion as soon as there's a problem and use the corrective-action-plan model ASAP--instead of staring the next year with a demoralizing review).
Of course you'd still want to incentivize top performers--so bonuses are fine--even large ones--but tying an above average review to ever getting a raise usually means several years of flat pay followed by, eventually, a small raise when you distinguish yourself. This encourages people to quit and take jobs elsewhere--especially people who are good but near the top end of the pay-scale (The Omnivore can't get a raise until someone dies and he is promoted--incentive to, erm ... well ...).
The gap between what can be said ("We need more checkins from the top bosses"--as though a message from the top-bosses has ever been anything interesting) to what should be said ("It's been six years since I've gotten a raise and I've worked my ass off, of course I'm unhappy) is yawning. The fact that no one can challenge this is telling (when The Omnivore was assigned to one of the Improve Morale teams, his recommendation was complete transparency of compensation and reward--as that would make everyone aware of their relative value as they were being graded on relative performance--but not told what that looked like to management).
This was greeted with uncomfortable silence as it would have exposed the arbitrary nature of the reward system and was never suggested in the results phase of the work-group. The Omnivore was totally not surprised.
ConclusionsThe tournament system for rewards is not a bad one--if you are a top contributor you deserve compensation (and the company that does not realize that will lose you). The problem is when (a) there is rabid competition for a tiny fixed number of top-slots and (b) the method to take them is obscure, involves rules-lawyering goals writing, social manipulation, and behind-closed-door horse-trading by your boss.
The Omnivore has worked with a team of GE Ex-Pats and could see how they were damaged by the GE culture (The company they came into had its own problems--but they were not nearly as severe). The culture of brutality, bred for at GE, led to unnecessary personal conflicts and conflicts of interest.
It's amazing this bullshit lasted as long as it did.