The Value of Candor in Employee Appraisals

by on June 3, 2009 · 0 Comment POSTED IN: HR Info Center

Frank, regular and comprehensive employee appraisals are a management necessity

Too many managers avoid making hard choices with employee appraisals and hurt not only their companies, but in the long run the employees they are trying to protect.

That candid advice came from Jack Welch, former CEO of General Electric, at a recent roundtable event sponsored by The Wharton School. “I would call lack of candor the biggest dirty little secret in business,” Welch said. “It blocks smart ideas, fast action and good people contributing all the stuff they’ve got.”

Lack of candor is particularly heinous, he says, when it stops supervisors from providing accurate employee appraisals to their subordinates in a misguided effort to be “nice to them.”

‘Rank and yank’: GE employee appraisals

At GE, managers adhere to a “rank & yank” philosophy – culling the bottom 10% of the workforce every year. In school, everyone gets grades and ranked, some flunk or drop out. “Why do we only give grades to kids and not to adults?” Welch asked, noting that, in order to be fair, such a system must be build on candor.

Employees must receive frank, comprehensive and regular performance reviews, he said. That way people will know where they stand, and what is expected of them.

Culture matters, too

Building a strong culture and developing leaders are key roles for any C-level executive, Welch said. He divides managers into distinct groups. Some show they have the right values and meet their profit goals. Some do neither and get fired. Some have the right values but miss their numbers. They get a second chance.

But perhaps the most corrosive managers are those who make their goals but don’t share the values. Maybe they are loudmouths in a culture that prizes collegiality. “Those are the ones who kill companies,” Welch said.

Although it’s tough, bosses need to remove them because failing to do so can corrode a company’s culture. “In the long run, that’s worse than seeing the results of one division drop,” said Welch.

Source: knowledge@wharton

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