Feedback Culture and the Death of the Annual Performance Review

Feedback Culture and the Death of the Annual Performance Review

In today’s data-rich corporate landscape, it seems absurd to have based the evaluation of an employee on a single data point

Amanda Luzzader
Amanda Luzzader
Content Writer
Feedback Culture and the Death of the Annual Performance Review

When General Electric announced in 2016 the elimination of their rather infamously intense annual evaluations, 300,000 G.E. employees breathed what must have been one of the largest collective sighs of relief in the history of corporate America. That's because for four decades, under the management of CEO Jack Welch, G.E. evaluated their massive workforce by ranking each employee according to a five-point scale: "role model," "excellent," "strong contributor," "development needed," or the dreaded "unsatisfactory." There was a quota on the number of employees to be ranked as unsatisfactory, and most of those receiving that rank were fired.

Corporate America called this the "rank-and-yank" method of employee evaluations, though Jack Welch famously used the deceptively innocuous term "differentiation." As it turned out, not only did the rank-and-yank way cause employees to quake in their shoes every twelve months, it was also hated by their managers.

Those G.E. managers were certainly not alone. In a survey of business managers, reported by the Harvard Business Review in 2016, nearly half of the managers polled (45%) said they did not see value in their annual employee evaluation systems. More than half (58%) of those polled said evaluating their employees annually was an ineffective use of their time. The 2016 survey went on to report that certain managers were spending a staggering 210 hours (more than 25 work days) in the conduct and preparation of their employee evaluations.

Moreover, in today's data-rich corporate landscape, it seems absurd to have based the elimination of an employee on a single data point (the yearly evaluation itself), even if that evaluation takes into consideration the employee's entire previous year of work.

To replace the annual rank-and-yank ordeal, G.E.'s upper echelon prudently waited until Mr. Welch retired, and then they implemented a new system, one that consisted of an ongoing loop of evaluation and feedback between employees and their supervisors by means of a simple smartphone app. Under this new system, bosses and workers began trading evaluations and feedback in real-time. This not only saved time, effort, and what must have been tremendous employee stress, it also generated lots of useful data, which in turn could be used to more effectively follow trends, identify problems, and affect meaningful change among the G.E. workforce. For instance, even if a manager and employee exchanged evaluation-related feedback only once per month for a year, the number of employee-evaluation data points would increase from one (the annual review) to twelve.

This new way of handling feedback became the basis for what is now called "feedback culture," a movement in corporate America that strongly favors a fluid, ongoing, and real-time approach to evaluating and evolving business organizations and their workers. Many Fortune 500 companies (including Accenture, one of the largest corporations in the United States) preceded G.E. into feedback culture, doing away with the annual performance review and other outmoded feedback models. And thousands of companies large and small followed G.E. into feedback culture in the years that followed.

Whether or not you've heard of feedback culture, and even if you're already adopting the new methods of feedback culture to improve your organization, Pulse For Good can certainly help. With our kiosk tools and services, your employee evaluation and other surveys, polls, and other forms of data collection can be easily set up, utilized, and curated. Contact Pulse For Good and join the feedback culture movement.

Sources:

https://www.businessinsider.com/ge-is-ditching-annual-reviews-2016-7 https://hbr.org/2016/10/the-performance-management-revolution

https://www.washingtonpost.com/news/on-leadership/wp/2015/07/21/in-big-move-accenture-will-get-rid-of-annual-performance-reviews-and-rankings/