Harvard Case - Performance Development at GE: Shaping a Fit-For-Purpose Performance Management System (A)
"Performance Development at GE: Shaping a Fit-For-Purpose Performance Management System (A)" Harvard business case study is written by Anand Narasimhan, Jennifer Jordan, Shih-Han Huang. It deals with the challenges in the field of Human Resource Management. The case study is 3 page(s) long and it was first published on : Aug 21, 2018
At Fern Fort University, we recommend GE implement a fit-for-purpose performance management system that embraces employee development as a core pillar, fostering a culture of continuous learning and growth. This system should be data-driven, leveraging technology and analytics to provide actionable insights and support objective performance evaluations. The new system should also be flexible enough to cater to the diverse needs of GE's global workforce, while remaining aligned with the company's overarching strategic goals and organizational values.
2. Background
The case study focuses on General Electric's (GE) struggle to revamp its performance management system, dubbed 'Performance Development at GE.' The existing system, implemented in 2015, aimed to simplify the process and empower employees. However, it faced criticism for lacking clarity, objectivity, and alignment with business needs. This resulted in frustration among employees and managers, hindering employee engagement and motivation.
The main protagonists are Jeff Immelt, GE's CEO at the time, and Beth Comstock, GE's Chief Marketing Officer, who spearheaded the development of the new system. They faced the challenge of balancing the need for a streamlined and efficient system with the desire to foster a culture of employee development and performance improvement.
3. Analysis of the Case Study
The case study highlights the following key issues:
1. Lack of Clarity and Objectivity: The existing system lacked clear performance standards and objective metrics, leading to subjective evaluations and inconsistent feedback. This created confusion and dissatisfaction among employees.
2. Disconnect from Business Needs: The system failed to align performance goals with the company's strategic objectives, resulting in a disconnect between individual contributions and overall business success.
3. Limited Focus on Development: The system primarily focused on performance ratings and feedback, neglecting the crucial aspect of employee development and growth. This hindered career advancement and talent retention.
4. Resistance to Change: Employees and managers were resistant to the new system due to its perceived complexity and lack of clarity. This resistance further hampered its effectiveness.
5. Lack of Data-Driven Insights: The system lacked robust data analytics capabilities, hindering the ability to identify performance trends, measure the impact of development initiatives, and make informed decisions.
6. Global Applicability: The system struggled to adapt to the diverse needs and cultural contexts of GE's global workforce, leading to inconsistencies and challenges in implementation.
7. Lack of Employee Engagement: The system failed to engage employees in the performance management process, leading to a sense of detachment and lack of ownership.
8. Limited Focus on Leadership Development: The system did not adequately address the need for developing leadership skills and competencies, which are crucial for driving organizational performance.
9. Lack of Transparency and Communication: The implementation of the new system lacked transparency and effective communication, leading to confusion and mistrust among employees.
10. Limited Integration with HR Systems: The system was not fully integrated with other HR systems, creating inefficiencies and data silos.
Framework for Analysis:
To analyze the case study, we can utilize the Human Resource Management (HRM) framework, focusing on the following key areas:
- Strategic HRM: Aligning the performance management system with GE's strategic goals and organizational values.
- Talent Management: Developing and retaining talent through effective performance management, career planning, and leadership development.
- Employee Relations: Fostering positive employee relations through transparent communication, fair performance evaluations, and employee engagement.
- Compensation and Benefits: Ensuring that the performance management system is linked to compensation and benefits to motivate and reward high performance.
- Training and Development: Providing employees with the necessary training and development opportunities to improve their skills and performance.
4. Recommendations
1. Design a Data-Driven and Flexible Performance Management System:
- Establish Clear Performance Standards: Develop clear, measurable, achievable, relevant, and time-bound (SMART) performance standards aligned with GE's strategic goals and business needs.
- Utilize Technology and Analytics: Implement a technology-enabled performance management platform that leverages data analytics to provide objective performance evaluations, identify performance trends, and track employee development progress.
- Adopt a 360-Degree Feedback Approach: Incorporate feedback from peers, managers, and customers to provide a comprehensive view of employee performance.
- Develop a Flexible Framework: Design a system that can be adapted to the diverse needs and cultural contexts of GE's global workforce.
2. Foster a Culture of Continuous Learning and Development:
- Integrate Development Planning: Embed development planning into the performance management process, encouraging employees to identify their development needs and set goals for growth.
- Provide Targeted Training and Development: Offer a range of training and development programs tailored to individual needs and career aspirations.
- Encourage Mentorship and Coaching: Promote a culture of mentorship and coaching to support employee development and knowledge sharing.
- Create Opportunities for Career Advancement: Provide clear career paths and opportunities for advancement based on performance and development.
3. Enhance Employee Engagement and Motivation:
- Promote Transparency and Communication: Ensure clear communication about the performance management system and its purpose.
- Provide Regular Feedback and Recognition: Provide regular feedback and recognition for employee contributions and achievements.
- Link Performance to Rewards: Align performance with compensation and benefits to motivate and reward high performance.
- Foster a Culture of Collaboration and Teamwork: Encourage collaboration and teamwork to enhance employee engagement and motivation.
4. Develop Strong Leadership Capabilities:
- Invest in Leadership Development Programs: Provide targeted leadership development programs to enhance the skills and competencies of GE's leaders.
- Promote a Culture of Servant Leadership: Encourage leaders to focus on empowering and supporting their teams.
- Develop Leaders at All Levels: Identify and develop potential leaders at all levels of the organization.
5. Ensure Global Applicability and Integration:
- Adapt the System to Local Contexts: Adapt the performance management system to the specific needs and cultural contexts of GE's global workforce.
- Ensure Alignment with Local Laws and Regulations: Ensure that the system complies with all applicable laws and regulations in each country where GE operates.
- Integrate with HR Systems: Integrate the performance management system with other HR systems to streamline processes and improve data accuracy.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with GE's core competencies in technology, innovation, and global reach, while supporting the company's mission to build a world that works.
- External Customers and Internal Clients: The recommendations prioritize the needs of both external customers and internal clients, ensuring that the performance management system supports the delivery of value to all stakeholders.
- Competitors: The recommendations consider the best practices of leading companies in the field of performance management, ensuring that GE remains competitive in attracting and retaining top talent.
- Attractiveness: The recommendations are designed to enhance the attractiveness of GE as an employer, attracting and retaining top talent through a culture of development, recognition, and reward.
- Quantitative Measures: The recommendations emphasize the use of data and analytics to measure the effectiveness of the performance management system, providing objective insights into its impact on employee performance and organizational success.
- Assumptions: The recommendations are based on the assumption that GE is committed to investing in its employees and fostering a culture of continuous learning and development.
6. Conclusion
By implementing these recommendations, GE can create a fit-for-purpose performance management system that fosters a culture of employee development, engagement, and performance improvement. This will enhance employee retention, talent acquisition, and ultimately drive organizational success.
7. Discussion
Alternatives not Selected:
- Maintaining the Existing System: This option would be detrimental to GE's long-term success, as it would continue to perpetuate the existing problems of lack of clarity, objectivity, and alignment with business needs.
- Adopting a Traditional Performance Rating System: This option would be counterproductive, as it would revert to a system that is outdated, inflexible, and demotivating for employees.
Risks and Key Assumptions:
- Resistance to Change: There is a risk of resistance to change from employees and managers who are accustomed to the existing system. This risk can be mitigated through clear communication, effective training, and a phased implementation approach.
- Cost of Implementation: Implementing a new performance management system requires significant investment in technology, training, and communication. This risk can be addressed by prioritizing key elements and implementing the system in phases.
- Data Accuracy and Integrity: The success of a data-driven performance management system relies on the accuracy and integrity of the data collected. This risk can be mitigated through robust data governance policies and procedures.
Options Grid:
| Option | Benefits | Risks | Costs |
|---|---|---|---|
| Maintain Existing System | Low cost, familiar process | Continued dissatisfaction, lack of alignment | Minimal |
| Traditional Performance Rating System | Simple to implement, familiar approach | Outdated, demotivating, lacks development focus | Low |
| Data-Driven and Flexible System | Improved clarity, objectivity, and alignment | Resistance to change, implementation cost | High |
8. Next Steps
Timeline with Key Milestones:
- Month 1-3: Conduct a thorough review of the existing performance management system, identify key issues, and gather input from employees and managers.
- Month 4-6: Develop a detailed plan for the new performance management system, including goals, objectives, and implementation strategy.
- Month 7-9: Pilot test the new system with a small group of employees and gather feedback.
- Month 10-12: Implement the new system across the organization, providing comprehensive training and support.
- Month 13-18: Monitor the effectiveness of the new system, gather data, and make adjustments as needed.
By following these steps, GE can successfully implement a fit-for-purpose performance management system that supports its strategic goals, fosters employee development, and drives organizational success.
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Case Description
In 2013, GE implemented the FastWorks program, an initiative that utilized tools and methods adapted from start-up methodologies to make the company more customer centric, lean and agile. With the spread of FastWorks within GE, a startling conclusion became evident - the existing performance management system might no longer be fit for the company's new direction. This case series follows the journey of GE's new performance management system, Performance Development, and its PD@GE app. By utilizing FastWorks in its development process, the HR team was able to leverage customer feedback and rapid prototyping to build a new system with unique features, such as instantaneous feedback, upward feedback and removal of employee ratings.
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