As much as researchers and many employees might applaud the decision, it doesn't mean it's going to be easy. There's a reason reviews have stuck around for so long, and it's hard to overemphasize how entrenched the annual review has become. It's the way most were raised as employees, a huge part of their workload, and a comfortable framework to administer and to defend pay, promotion, and firing decisions. Adobe's Morris says that one of her biggest obstacles was actually convincing her own people that this could work.
Even if companies claim loudly that they've done away with annual reviews and rankings, there are often "shadow rankings," where companies still do effectively the same thing, but more informally, in the background. Meanwhile, HR executives get particularly nervous about the pay piece, about how they can pay for performance in the absence of a formal performance-measurement system.
"If you get rid of the performance ratings, how are you going to get rid of a fair and equitable and measurable system to blame the distribution of pay on?" Paul Rubinstein, a partner in Aon Hewitt's talent strategy consultancy asks, rhetorically. "Because why did performance ratings come into existence? So there's some mechanism to force pay decisions. People wonder, which came first: the rating or the pay decision?"
"Because why did performance ratings come into existence? So there's some mechanism to force pay decisions. People wonder, which came first: the rating or the pay decision?"
Support and training on how to make pay decisions without rankings has taken a lot of investment at Adobe, Morris says. Even within GE, there's still a sense of conflict, which might help explain why the company seems hesitant to fully commit to removing numerical rankings.
"One thing we do know is that we will maintain our culture of meritocracy and differentiation," Peters says. "So we have to make sure whatever other aspects or factors come into play, to make sure you still have that. We're trying to figure this out and keep some of the fundamentals of the culture and also move to a place where it's more contemporary. I don't know what the answer on that's going to be yet."
In early pilots, the company saw no difference in pay differentiation when managers didn't use ratings. But it has a lot of people to convince of that, so different pilot groups will continue doing different things until there's more longitudinal data.
The harshest critics of performance reviews and ratings argue that numerical rankings and pay differentiation are perhaps the most damaging parts of the system, and that any regime that preserves them can't hope to truly change. And many companies like the idea of getting rid of reviews and rankings, but struggle to follow through.
If GE has one thing going for it, it's a uniquely deep bench of management talent, and a culture that emphasizes constant improvement and helping other people succeed. That made stack ranking less harmful at GE than it was at other companies, according to Bob Sutton, and it might help it overcome the rockier parts of the transition.
"Although Jack believed in it like a religion, I think that they figured out [stack ranking] was something that didn't work, that was faith based," Sutton says. "One thing I will give them credit for, going back to Jack and continuing to today, is that they've clearly defined a star employee as someone who does great work and who helps others succeed as well."
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