GE Considers Scrapping The Annual Raise (bloomberg.com)

A user shares a report that details General Electric's rethinking of the annual raise. Bloomberg reports: "GE executives are reviewing whether annual updates to compensation are the best response to the achievements and needs of employees. The company may also scrap the longstanding and much-imitated system of rating staff on a five-point scale. Decisions on both issues may come within the next several months, spokesperson Valerie Van den Keybus said by phone." "We uncovered an opportunity to improve the way we reward people for their contributions," GE's head of executive development, Janice Semper, said in an e-mailed response to questions. It will involve "being flexible and re-thinking how we define rewards, acknowledging that employees and managers are already thinking beyond annual compensation in this space." In response to this news, ErichTheRed writes: First it was "stack ranking," the process where GE fires the bottom-rated 20% of the workforce every year. Now, a new HR trend may be brewing at GE that is destined to be copied by MBAs everywhere if it takes hold. Personally, in terms of cargo-cult HR trends, I'd take Google's open office nightmare over this one. What do you think this would do to employment stability if widely enacted? I can definitely see banks rethinking 30 year mortgages, for example...

Comments

only for the little people

[Lead Butthead]

I bet real money the executive compensation packages will continue to grow unabated.
The cockroach that came up with this one will get an extra bonus for the year.

Re:Yeah, Right

[rudy_wayne]

"We uncovered an opportunity to improve the way we reward people for their contributions," GE's head of executive development, Janice Semper said. "It will involve being flexible and re-thinking how we define rewards, "

Translation: We're always looking for new ways to screw our employees.

management

[goombah99]

The thing about performance appraisals is that they are a process. What is good about process is that while in many cases it's not required its good at rounding up the edge cases. It assures fairness in opportunity. Otherwise the squeaky wheels get 90% of management's attention. it is also a chain. It's a time when middle and upper management communicate about employees. it's a time when every employee gets time with the boss. All of these things of course should happen all the time but they can't. there isn't enough demand or time so instead we have to reserve time for it. Thus even though for most employees the process is perfunctory it's not perfunctory for everyone. Also you get surpises. You hear things you wouldn't have heard about aspirations and frustrations in these 1 on 1s because the framework of telling what you did the last year brings it out. It's a time when a manager can tell you that if you want a certain new job what you need to change to get it.

Re:We just gave the top 20% a 3% raise fer chrisak

[PRMan]

Exactly. Here is what happens to me in EVERY job with this review nonsense:

First year. Great review! You're a rock star. 5% bonus.

Next year: Good review. 4% bonus.

Third year: That guy's getting paid too much, find a way to screw him because he failed to read one e-mail, even though he saved the company millions. 1% bonus.

Find new programming job: 10% bonus.

Re:We just gave the top 20% a 3% raise fer chrisak

[PCM2]

I wish I was just being bitter and cynical, but this just seems to be the pattern. Some of the jobs I plain quit, I didn't even hate the job. I would have been happy to stay there -- provided it didn't mean staying there, year after year, doing the exact same job with the same title for about the same money (or a "raise" that barely matches inflation). Not one effort made, not one single finger lifted to retain me as an employee, no matter how many compliments I got on my performance. Quite literally, talk is cheap. So I'd quit, everybody would act surprised, and I'd take my salary increase and my new title at another company down the road.

And it kind of boggles the mind. Imagine if the first company hadn't wasted all the years they invested in training me and me gathering institutional knowledge and know-how. All of that was investment. All of it cost money. And instead of using what they paid for, they let me walk away and apply my skills elsewhere, occasionally with the competition. No wonder they can't afford to give raises.

But that's not just one company, it seems to be every company now. It's the American way of doing business. Human capi^H^Httle management.

What's the problem?

[tomhath]

GE is considering replacing the ritual of an annual performance review with having managers constantly give employees feedback. That makes a lot of sense to me - praise or criticize performance throughout the year rather than keeping a file and trying to remember what exactly it was the employee did eleven months prior.

Second, they are considering something similar for pay increases - no reason to wait until the end of the fiscal year to give a raise. The top 20% will still be pampered, the middle 70% will hang around for a while until they get tired of lousy raises, and the bottom 10% better keep their resume up to date

In response to this news, ErichTheRed writes:
First it was "stack ranking," the process where GE fires the bottom-rated 20% of the workforce every year.

Erich has it wrong. Welch advocated trimming the bottom 10%, not 20%. And having worked for GE for several years, I can assure you that those who were let go were never missed. The bigger problem was the top 20% who got most of the raises - they were all either ass kissers, children of managers, or helped along because of their "diversity".