Publication Date

10-2017

Abstract

[Excerpt] Over the past decade, organizations have begun to move away from traditional performance management processes (annual reviews, assigned performance ratings, a link to compensation) to remove “performance ratings” based on the perception that traditional PM is not working.

  • As of 2015, more than 55 companies have removed performance ratings. Among those are some high-profile companies such as GE, Microsoft, Accenture, etc. (see Appendix A).

  • According to a study of 244 companies in 2016, almost all companies in the study use ongoing feedback, 52% of companies have adopted ratingless reviews, and 34% of companies use ratingless reviews and ongoing feedback.

  • 80% of participating organizations say that managers make decisions how to allocate rewards without ratings while staying within budget constraints.

The perceived impact of these new performance practices is high: 90% of companies that have redesigned performance management see direct improvements in engagement, 96% say processes are more simple, and 83% say they see the quality of conversations between employees and managers increasing. It is noteworthy that the positive impact may not all be attributed to the removal of performance ratings.

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Suggested Citation
Oakley, S., & Chen, D. (2017). What organizational changes have companies experienced upon eliminating ratings within their performance management system? Retrieved [insert date] from Cornell University, ILR School site: http://digitalcommons.ilr.cornell.edu/student/x/

Required Publisher Statement
Copyright held by the authors.

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