Judgment Day
It's survival of the fittest as companies tighten the screws on employee performance reviews
The flurry of lawsuits is prompting many other companies to make similar changes. After settling an age discrimination suit of its own, Ford last year also scrapped rankings. And a growing number of other employers are newly unhappy with the GE system. In a fall 2002 survey by DDI, only 39 percent of companies using forced rankings found them to be even "moderately effective." The lawsuits aren't slowing down the rate of change, however. Instead, employers are making more changes to jury-proof their appraisals by backing up ratings with evidence and objective data. "The use of data really helps avoid litigation," says Linda Martin, a Seattle-based appraisal expert for Towers, Perrin. She says clients are increasingly asking for help "calibrating" ratings across departments so that employees who might be rated A in one department aren't given C's in another. These kinds of changes not only prevent lawsuits but also make appraisals fairer and more accurate, she says. Nobody likes litigation, of course. But the result, in this case, could be a little more fairness and a little less stress in the workplace.
Feed the eagles...
Making the grade
And starve the turkeys. More companies are following GE in ranking employees, rewarding the best while forcing the lowest to improve or leave. Percent of companies using these rating systems:
1997 2002
GE-style rankings 13 pct. 33 pct.
Peer ratings 24 pct. 29 pct.
Subordinate ratings 21 pct. 22 pct.
360-degree appraisals NA 21 pct.
Objective data NA 71 pct.
Source: DDI
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