Farewell to Performance Ratings at GE

While performance rating systems are still the norm at many organizations, it’s not really that surprising to hear that a company has abandoned the concept.

But it’s a little more noteworthy when that company is General Electric, an organization that helped pioneer the practice.

Yesterday, GE informed its workforce that 200,000 salaried employees will no longer be given one of five labels—ranging from “role model” to “unsatisfactory”—as part of their annual performance reviews, the Wall Street Journal reports.

This farewell to performance ratings has been in the making for at least the past decade, during which time the Fairfield, Conn.-based conglomerate has eliminated the famous (infamous?) forced-ranking system championed by former CEO Jack Welch.

Still, the new rating-free approach—which GE previously piloted with roughly 30,000 employees—marks a departure from a practice the “longtime standard-bearer for corporate management” has relied on “in some form or another for the last 40 years,” the Journal notes.

In its place will be a performance-management system that asks employees and managers to exchange feedback via a mobile app known as PD@GE, which compiles messages and forms a performance summary that’s delivered at the end of the year.

According to the Journal, the company is hopeful that the new approach fosters more nuanced pay and bonus decisions. High performers, for example, can still receive annual raises and bonuses, while managers are able to make “finer distinctions” with respect to middling employees, for whom more detailed feedback may serve as inspiration to improve.

The organization is also training managers to improve regular feedback conversations, the Journal reports.

At least one of those managers, Brian Finken, is confident that doing away with employee ratings will enable employees to focus more on review discussions—what they’re doing well and where they can improve—and less on scores that don’t really paint a complete picture of their performance.

Finken, a Florence, Italy-based operations leader in GE’s oil and gas business, also looks forward to implementing the new dialogue-driven approach to performance reviews, telling the Journal that he’s “glad I don’t have to spend time codifying feedback into one score. I can focus on the conversation instead.”