The lack of process quality in GE’s performance evaluation system
GE has a disconnect with their performance evaluation system. GE’s former CEO Jack Welch talks about Six Sigma quality in his book. Six Sigma is if you do a million transactions, if you make a million wedges, you can only have 3.7 of them that are defective in a Six Sigma company. They said, “That’s the way to run GE and that’s the way you look at every work processed with that kind of quality, okay?”
In the next chapter, he’s talking about a human resource system with a built-in error rate of 10% and he says that without blushing. Now how the heck do you justify that? Only the richest companies in the world can do that. And you know I’ve been in them. You know believe me who’s more profitable, who makes more money than Exxon? Maybe Shell but not really.
GE is one of the most profitable corporations ever been created and how silly these systems are that they use. So I’m not going to say – being obviously been successful and do stupid things but that’s not why they’re successful. They’re successful for many other good reasons. Not for some of these silly ones.
Performance evaluation system and the link to base pay
The tie between a performance evaluation system and base salary treatment needs to be indirect. You need to tell people -“Yeah, there’s a connection between your performance and your pay but it’s indirect. In other words, if you – if I tell you you’re this close to being fired, don’t expect a big increase, expect no increase.”
But if I tell you, “You did a fantastic job and you’re really a valuable contributor” that doesn’t necessarily mean you’re going to get a big salary adjustment. There are the other factors we talked about like budget . You know, we don’t really need to know what you think when we’re evaluating you. Have you ever seen Simon Cowell on American Idol ask somebody when they’re done singing especially in the trial period, “Well, how do you think you did?”
Okay. Now, do you think Simon needs to know how you think you did to tell you how he thinks you did? Of course not. Because here’s the thing, you’ve seen millions of people sing, he heard you sing, he compares the two, and he makes his judgment, that’s what he does. The only reason he asks you to talk about how you think you did is it’s funny.
Coaches don’t need to know what you think to tell you what they think. They already know. But – I’m sorry, evaluators don’t, but a coach needs to know in order to know how to talk to you. It changes the nature of that part of it.
Now again, a performance evaluation system is still not a democracy. If you don’t want to play, you don’t have to be on my team. But, you know, if you are going to play on my team, it would be helpful if you would be involved in your employee performance reviews
Edited remarks from the Rapid Learning Institute webinar “No More Performance Reviews! – A Revolutionary Approach to Performance Feedback” by Gary Markle
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