How GE replaced a 40-year-old performance review system

By December 22, 2016Management & HR
Management & HR GE

Making a company-wide change is hard no matter what. Changing a performance review system that has been in place for 40 years, in a company with over 300,000 employees, sounds next to impossible. But that is exactly what General Electric has been up to over the past couple years: replacing its performance management system with one focused on performance development.

The new system, PD@GE, works on a system of “Insights” that can be offered to employees by managers or fellow employees (both verbally and through an app). There are two types – Consider Insights and Continue Insights. A Continue Insight celebrates and encourages an employee when they do something good, while a Consider Insight offers constructive criticism when employee performance shows opportunities for improvement or needs guidance.

To get deeper into what PD@GE is all about, we spoke to Sonia Boyle, vice president of human resources at GE Canada, about the system – and how it was implemented throughout a company that spans 170 countries.

Workopolis: From your point of view, what is the goal of any performance review system?

SB: I think that it’s changing. And I think that’s why there are so many employers that are looking at revamping their systems. Traditionally, performance management, as we would call it, was really a look back. It was formal, it was usually once a year, sometimes twice. But it was always looking backward. And I think in order for any type of performance development system to be worthwhile, it really needs to be about trying to go forward. And that’s really what our shift has been about.

How did GE know it was time for a change?

It was around discovering and listening. The previous system had been in place since 1976 – we called it the EMS, which stood for Employee Management System. There was recognition at the very senior levels of the company to say, “is this still working for us?” So we asked employees and managers. And the feedback we heard globally was that we need a more continuous, fluid process versus an event-driven one. We wanted a system to position us for the future, a contemporary performance development system that provides “real time” feedback tied to customer and shareholder outcomes.

Tell us about the new system.

Performance management was our historical approach – a system-driven, top-down and formal process. So in the new system, we changed the wording to performance development. We call it PD@GE. From our perspective, it’s really around forward-thinking, actionable conversations. It should be a daily priority. We look at performance reviews in terms of insights and coaching, and delivering impact and outcomes. It is about developing employees and delivering business outcomes, focusing on work that matters most, and accelerating an employee’s growth through continuous discussion and enabled by a more contemporary and mobile application.

What role does the PD@GE app play in the process?

The app isn’t the end goal. The end goal is really around the conversations that employees and managers are having. The core elements are around priorities, touchpoints, insights, career dialogue, and coaching. The app is really around being able to document conversations. If someone goes in and offers you an Insight, you will get an automatic email notification. They’re not anonymous, and that encourages further trust, which is part of our culture. But your manager doesn’t have access to it, and I as the HR leader don’t have access to it. It’s really about the employee owning it.

Does your system have end-of-year reviews?  

We do encourage employees and managers to set up summary touchpoints. You can share your Insights that you’ve received throughout the year and you can say, “look, what are we going to do going forward?” We really want the focus to be on that forward-looking development and developing priorities to get you there.

How did you implement a new system within such a massive company?

There were phased roll-outs. It started in mid-2015 with a pilot approach. We added more later in the year, and by the end of 2016 we have mostly everybody on this system. I have heard that the very early iterations in mid-2015 was very different than where we ended up today because of what we heard through that pilot group.

What has the response been?

I can tell you anecdotally that people who have embraced it, love it. They feel there’s a little bit of a liberty and a freedom with it. And there can be immediate feedback – you’re not waiting six months, and then you forget about what happened at the beginning of the year.

What were the biggest challenges?

I think the challenges were just around change. If you’d been with GE for any amount of years, you were sort of used to the rhythms of the old system. Especially for managers, there was a different expectation around the types of conversations that we wanted them to have with their employees, and how they were going to develop talent and position us for the future.

This new system requires a lot of vulnerability and trust – developing that must have been a challenge as well.

We’re doing a lot of training, getting comfortable in terms of giving Insights. And there’s tips in the tool, and a ton of availability in terms of reminders and refreshers on our HR portal and various other systems within the company.

How has it been training managers on this?

As a leader, you’ve got to be vulnerable. That builds trust among your team. And so, this program helps to facilitate some of that. Managers will receive support in various ways from the HR community. But we’re also looking at our leadership program curriculum to include elements of trust and vulnerability. And authenticity. Because I think that drives the conversation to be a good one as well.

A common issue that comes up with revamped review systems is rankings – especially how they relate to bonuses and compensation. Does PD@GE have a ranking system?

As we were rolling it out, we tested this system with a ratings system, and without. And we announced earlier this year that GE, company-wide, is moving away from having a formal annual static performance rating. There were a lot of questions around bonuses and merit increases, but our managers should know who their best employees are. Where we piloted the no-ratings system, things like compensation and bonus planning were not impacted, and the quality of the conversations were better. Managers will need to know their employees so well that they can articulate their impact and behaviours, and then rewards are aligned to both, rather than merely relying on a performance label.

Do you have any advice for small or medium businesses looking to revamp their own performance review systems?

I think it’s all about the tone from the top. We couldn’t do this if it wasn’t something that our most senior leadership believed in and supported. So I think even for a small or medium enterprise, it starts with leadership – and the commitment around developing employees and having open conversations. Eliminating the performance review and coming up with what works for you isn’t too difficult to achieve, but you’ve got to do it based on your employee base, the resources you have available, and your culture. And it all starts with leadership.

For more on the history of the performance review, and how GE has given it a modern twist, check out this episode of Safe for Work, the Workopolis podcast:

See also:
11 ways to give better performance reviews
How to give a negative performance review

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