Diane Gherson, IBM’s Chief Human Resource Officer, told Fortune “Employees didn’t want to do self assessments or be ranked against others”. The company therefore conducted a company wide survey amongst its 380,000 employees to understand the best way to go about the new performance review process. IBM knew it had to overhaul its performance management system in order to keep employees engaged and motivated. Employees felt uncertain about their performance and had to constantly be fearful of how they were perceived by their managers, which was determined by how well you could rub shoulders with their department heads (as well as other supervisors). According to a Forbes article, the company reduced its work force by 26 percent, potentially putting more than 100,000 people at risk. In early 2015, IBM went through a period of mass layoffs. This system would inadvertently stunt any form of creativity, growth and innovation. The stack-ranking system, which was popularized by the then CEO of General Electric, Jack Welch, would create an environment where employees would have to compete against each other. People were intended to be nothing more than replaceable parts - “resources” that can be changed out and swapped at will. The idea is that the “value” within the company is not within its people, but rather within process definitions and intellectual capital. “In the groups where I worked, there were explicit efforts (stated by management) to reduce the need for and presence of “heroes”.
Stack ranking sociolo professional#
This encouraged managers to suppress any form of ambition to improve or encourage professional growth. What this effectively meant was that employees in lower bands were more likely to end up at the bottom 5 percent, simply because they were not in senior roles. This classification level went up to nine and ten for the most senior executives, sector leaders and partners. According to Pritesh Dubey, a previous employee at the company, “if you were an entrant and joined IBM straight out of university, you were given a band six rating”. What was worse was that employees were subjected to ‘band’ categorization structure. During periods when the company was not reaching expected revenue growth, the PBC system, (or more commonly known as stack ranking), helped IBM identify the bottom 5 percent ‘underperforming employees” and subsequently remove them. The flaw in the process was that employees were ranked and put into ‘buckets’.
At the end of the year, the department manager would give feedback on how the employee had performed and rate them on a scale of one to four. The manager would list the actions the employee would need to take to realize these goals. Employee targets were set according to the company’s overall goals with the help of a department manager. These performance management targets were labeled as ‘ drive to win’, ‘ execute quickly’ and ‘ team spirit’. The framework was built according to performance management targets or, as IBM called it, ‘ Value principles’. IBM’s performance assessment framework was based on a project by the name of PBC (Personal Business Commitments). What’s more, employees are now able to adjust their goals as and when they felt it is necessary.
The new system was implemented to match the ongoing tasks employees had to undertake at IBM. As a result, employees felt that this discussion was a waste of time and was not conducive to professional growth. At the end of the year, employees would have to have an irrelevant discussion with their managers about projects they had already completed months prior to the review. However, in reality, employees were not working toward what they had originally listed as an annual objective. Diane Herson, IBM's Chief Human Resource officer, told Fortune that annual performance reviews assumed employees would only be doing a specific task throughout the year. The company recently announced it would be replacing its ten year old performance management system for a system known as 'checkpoints’. This motto reflects the new approach IBM will be taking to its performance reviews. Ginni Rometty, the chairman and CEO of IBM, lives by the motto " never protect your past".
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