The Problem with Performance Reviews

The Most Basic Problem: Performance Appraisals Often Don’t Accurately Assess Performance

- W. Edwards Deming

Yes, you read it right. Since long back, I have been thinking about writing on this topic, but somehow it couldn’t be possible. Now, it’s the right time to discuss this critical and significant topic for all.

Learning from Jack Welch and GE

We all know the name of Mr. Jack Welch—one of the best CEOs of one of the world’s best companies, General Electric (GE). His working tenure with GE was 1980-2000. During his time, he systematically transformed the company culture and many systems. He made many small but effective changes which produced drastic results.

According to reports, GE experienced 6x growth in terms of profit and turnover and increased its market capitalization by 30x. For this growth, Jack Welch did not increase manpower but decreased total employees by 25% and managerial level staff by 45%. One of the key systems he implemented was the Performance Management System.

According to Mr. Jack Welch: “Appraisals to me were like breathing….. In a Meritocracy, nothing is more important.”

The Increment & Promotion Season

This is the time of increment and promotion, something every employee waits for all year long. But here’s the question: Do you think employees can be more motivated if they receive a higher salary?

Studies have shown that high compensation provides employees with a sense of satisfaction. On the contrary, low compensation hinders motivation and performance.

So, how do we justify employee performance with their salary hike? More importantly, how do we make employees feel that their salary rise is fair?

The Role of a Performance Management System

We already have a system called the Performance Management System (PMS). We talk a lot about Job Description (JD) and Job Specification (JS). Some are aware of Key Result Areas (KRAs) and Key Performance Indicators (KPIs). But very few organizations implement them in the right way.

Some of our client companies have achieved extraordinary results by implementing this system across the organization. With PMS, employers and employees are on the same platform during performance evaluation. Discussions are based on data and results. After the performance appraisal, we can easily identify training needs and areas of improvement for both departments and individual employees. This creates a culture of result orientation and focused team members.

Let’s Work Together

If you're looking to enhance your organization's performance appraisal process, we’d love to support you in implementing a smooth, effective, and results-driven system.

Let’s work together for success. Feel free to reach out—I’m just a message away!