I’m pretty sure that we all know who General Electic (GE) is. The company has been around for 124 years and employees over 315,000 people. The company has made everything from toasters to railway locomotives to aircraft engines to nuclear power plants. They truly understand the importance of information technology. As impressive as all of that is, it may start to pale in comparison to what the company is planning on doing now: completely changing how they evaluate their employees. As the person with the CIO job at your company, perhaps you should sit up and take notice of what they are planning on doing…
Why Is GE Thinking About Changing How They Evaluate Employees?
Before making any change, every person in the CIO position first has to make sure that they have an answer to the question: why change? Over at GE they have spent decades creating a specific type of worker. Currently, the ideal GE employee spends their time looking for ways to squeeze defects out of products (can anyone say 6 Sigma?) and making sure that they never have to admit that they are uncertain. However, the company realizes that what used to work for them is not going to do the job as they move into the future. They need to change the way that their employees work.
GE is looking to change the way that their employees both work and act. They now want their staff to take risks, test out new ideas with their customers, and even, gasp!, make mistakes. The driver behind these changes is that GE wants to reinvent itself into a company that is both leaner and which is innovation driven. In order to get to where they want to be, they are going to need to have a workforce that that is nimbler and has the ability to develop products faster and more cheaply. GE has come to the realization that it is no longer realistic to expect perfection.
The way that GE used to evaluate its employees involved performance reviews. The process involved a series of self-evaluations, formal write-ups, and other processes. The entire process could end up taking as long as five months from start to finish. The end result of this process was that employees were rated into one of five categories ranking from “role model” to “unsatisfactory” as a part of each employee’s annual review. Raises were then handed out at the same time each year based on how well each employee did on their ranking.
What Would The New System Look Like?
The existing GE systems won’t provide them with what they need in order to motivate their employees to take more risks. One of the ways that they are hoping to make this happen is by doing away with the annual raise. Instead, they plan on replacing it with a system that will allow GE managers to dole out wage increases at different points during the year. GE managers will also be equipped with additional tools that they can use to both reward and motivate their team members such as the ability to give additional time off.
The annual summary is not going to go away completely. Instead it will continue to exist in an abbreviated format. Instead, GE is going to be asking its managers to check in with their employees more often. GE employees now use a mobile app to both give and get feedback on how they are performing their jobs. As GE has moved to a ratings free evaluation process there had been concerns that this might make the job of managers more difficult. However, the feedback so far has revealed that bosses will still able to distribute merit pay and promote workers correctly.
What CIOs need to understand is that this change is affecting all of GE. The employees are being asked to embrace uncertainty. This is turning out to be difficult to do. Managers are now being encouraged to evaluate employees based on their understanding of customer needs and how quickly they can validate their assumptions about potential products and customer solutions. GE’s goal going forward is to find a way to reward their employees for asking the right questions instead of just “being right”.
What All Of This Means For You
As CIOs we always have be on the lookout for how we can make our IT department more productive. Over at GE they have spent the past few decades working very hard to have their workers find ways to eliminate errors and defects from their products. Now, GE has realized that in order to be successful in the future they are going to have to change their thinking in order to become leaner and more innovative.
The old GE worker evaluation system could take up to five months to complete. Workers were ranked from “role model” to “unsatisfactory”. Raises were then give out at the same time each year. Under the new system that GE is implementing, managers can give out raises at different times throughout the year. Workers are evaluated without being ranked. Managers can still have a smaller annual meeting with each employee, but they are encouraged to meet with employees more often during the year.
CIOs can learn from the changes that GE is in the process of making. In our IT departments we want to accomplish the same things that GE is striving to achieve: have a lean organization that is productive, innovative, and not afraid to take risks. If how we evaluate our staff is one way that we can make this environment exist, then perhaps we should try to copy what GE is doing.
Question For You: If you implemented the GE system, how would you deal with under-performing workers?
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What We’ll Be Talking About Next Time
As the person with the CIO job, you spend a lot of your time thinking about importance of information technology which includes things like the cloud, securing the network, etc. However, the company that you work for is in business to do one thing – make money. They generally do this by running a factory and creating goods. What this means for you as the CIO is that you need to spend some time thinking about the factory and how the IT department can help to make it run more effectively.