Performance Management System at General Electronic Company - Case Study Example

Performance management system at General Electronic Company:- One of the most distinguished companies on the globe of plant is General Electric Company. It is working in more than 100 countries with 315,000 employees worldwide, its business range from aircraft engines and power generation to financial services and television programming. (Craig Donaldson) It provokes the culture that is homogenous across the company, with the help of competent leadership and strategic human resource management. Strategic Human Resource Management:- GE thinks that it is essential to compose such HR policies, schemes, measures, priorities that are associated with the business plans and strategies. According to Steve Bertamini, CEO for GE’s Australian & New Zealand operations (Craig Donaldson): “The thing about GE is that there are great opportunities for HR to play a role at any point of the business decision-making process. It is very easy sometimes to be sidetracked on what we would like to be doing, but if we cannot translate that into a bottom-line impact for the business, then that lessens our value to the organization. HR’s contribution to the bottom-line is ensured by integrating it into the company’s management system. (Craig Donaldson) GE’s management and HR teams meet at the commencement of every year to evaluate the outline of general purpose and objectives for the HR function. After that, they figure out the main elements, which will help the HR strategy to link itself to the business objectives and both internal and external customers. (Craig Donaldson) Steve Bertamini says, “So even at the beginning of the year when we are going through what we need to achieve, so there is already a linkage to measuring people and to the overall business strategy. We can then confirm that we are on track throughout the year. The aim is to have everybody driving in the same direction with a clear vision of what that business is looking to deliver in that year. We continually monitor whether it really is delivering the results that we are requiring” (Craig Donaldson). According to the Steve Bertamini, the GE’s global CEO Jeffrey Immelt each year travels from GE’s Business to support the strategic HR planning process. He considers it as verification for the importance that GE places on its people planning processes and their importance to the management of the company. Sam Sheppard considers the leadership the core competency that ‘energizes the organization’. He says, “A leader can energizes others – they can create an environment that propagates vision, and their team will execute on that vision. More importantly, they inspire and motivate others, they are constantly listening to others in order to empower employees, and they are expected to follow through on what they require of their teams, but the real difference for the cream of the leadership crop is in those who are prepared to listen to feedback and act on it. Everybody gets feedback within GE, but the people, who want to be successful, regardless of their background, are those who actually hear what the organization, employees and peers are telling them, and they change their behavior. This is critical at the senior level, as some people will start with strength in one particular area and need to grow in another.” (Craig Donaldson) Employee management system:- Employee management system (EMS) is the basis of GE's talent and performance management processes. This tool is used as year-round tool. Every employee is required to use these tools. It is composed of several areas of concentration (www.ge.com): “Accomplishments, strengths, development needs, career interests, development plan”. Benefits are given included (www.ge.com): “Review performance and objectives with your manager, focus on delivering quantifiable results, link to goals and objectives, monitor development needs & action plan, resource for review monthly to ensure completion by year-end, add new development needs to list as identified, build resume for potential job changes, first impression for potential hiring manager. “ Competency model:- Hr competency model of the GE is based on the “recognition of need” to develop the HR professionals to train them to add value to the company. A study concluded that the responsibilities of the GE’s HR needed to modify. Additional Competency needed by the HR to develop included (A Competency Model for Human Resource Professionals): “Organization and process design, Continuous change and innovation, Employee involvement,High performance team development, “Learning organization" development, Reward and recognition systems, Partnering with community groups”. Tools were needed by HR professionals to develop the new competency model included: Establishing a professional development framework, stating clear standards for excellence, Identifying a viable HR career path, Developing tools and processes for professional development, Clarifying HR's role”. (A Competency Model for Human Resource Professionals): Performance Evaluation & feedback:- Jack Welch says, "If the rate of change inside an organization is less that the rate of change outside... their end is in sight” (business guide). Company commences the annual evaluation under the inspection of staff member and the GE executive. In the evaluation, every employee’s performances are evaluated according to the ranking system, where he/she is awarded number between one and five. Figure: Performance matrix Figure source: Leadership as a driver for Growth Steve Sargent Chief Executive Officer GE Australia & New Zealand The employees’ direct managers complete the performance appraisals. It includes the employee’s responses about the assessment. On the other hand, 360 feedback is included from managers, staff members and peers. This 360 feedback will show the management the strength and weakness of each employee. GE’s CEO Jack Welch applied the Pay for Performance matrix for professional employees in the organization. In short, the matrix defined performance in the following categories: “outstanding, excellent, fully satisfactory, acceptable and unacceptable. 10-15% of employees would be defined as outstanding or excellent and could receive pay increases up to 8-10% per year; 70% were categorized as fully satisfactory and got a lesser increase; the remaining 10-15% was acceptable or unacceptable depending on budgetary considerations, and could be eliminated”. (Business week) Consistent 360-feedback process will help the organization to identify needed competencies and provide related training. This will help the GE to reduce the maintenance and development cost. (Business week) Career Management System:- Every employee in the GE is provided with the careers management with the support from the company through guidelines. This includes four phases (A Competency Model for Human Resource Professionals): Phase one: Understanding Individuals are provided information regarding the HR vision and mission, the competency model and the career framework. Phase two: Assessment The HR professional is encouraged to assess their competencies against the model using the company's assessment tool. Phase three: Learning About Developmental Resources The individual is identifies sources of training, education and development which will strengthen competencies in areas of need identified during the assessment in phase two. The company provides information on the opportunities, which are available. Phase four: Action Planning HR professionals develop and implement action plans, which lead to development of the competencies identified in the HR competency model. Figure2: training process in GE Figure source: Leadership as a driver for Growth Steve Sargent Chief Executive Officer GE Australia & New Zealand Succession planning:- GE developed and refined the succession planning with a strong focus on leadership. Intensive reviews are prepared during the annual ‘Session C’ leadership and organizational talent reviews. The CEO and vice president of HR gather up with leaders and heads of HR from across diverse business divisions. In each session, they evaluate the aptitude and organizational focal point of each unit in order to recognize the future leadership potential coming through GE. Bertamini says: “GE leadership meets with its top talent pool regularly, and ensures they are monitored to ensure they receive the development they need to be successful. Talent within GE is tracked on a variety of layers, from up and coming executive talent, through to promising new hires. GE’s leadership spends a lot of time on what is happening in the business and ensuring that they have the right people in place. We also track who is ready to move to a different business in order to accelerate their career development.” Figure3: succession planning Figure source: Leadership as a driver for Growth Steve Sargent Chief Executive Officer GE Australia & New Zealand Recommendations:- Following are the recommendations for the further improvement and development of GE’s HR performance management system. As GE is using performance matrix, the low ranked employee will be dismissed from the job, and new employee will be hired. GE should not layoff them, but spend the money on training, that will be used to hire new comers. GE is the international company, the employee have to work around the clock, which provide them less work/life balance. They should provide them with work/life balance, especially for the women workforce. As performance based organization, there is competitive environment between the employees. That creates the rivalry and leg-pulling environment, because every employee has the fear of losing its position and job. This should be avoided and employee must not be suspended at the end of the performance evaluation. For further development, employee must be handled calmly during the performance evaluation and feedback process. This can help to bring employee satisfaction and may carry over into future activities. Ranking system can result in low self-esteem because employees are rewarded for competing against one another instead of working. Conclusion:- In short, GE is defining its talent based on the leadership skills. They have to know how to communicate, evaluate and give feedback. Empowerment is the basic focal point of the company. They must know how to express their goals, needs, career path and values. Employees are provided with informal feedback on daily basis and a formal feedback every year. Competency model is made to meet the changing environment. Overall GE is on the path of success through employee empowerment, leadership quality and strategic human resource management. References:- Craig Donaldson interview with Steve Bertamini and Sam Sheppard (www.humanresourcesmagazine.com.au 2003) www.ge.com A Competency Model for Human Resource Professionals http://www.1000ventures.com/business_guide/mgmt_new-model_25lessons-welch.html Steve Sargent Chief Executive Officer GE Australia & New Zealand (Leadership as a driver for Growth) Jian ming Zheng GE global research (Management Insight and Leadership Secrets of the Legendary Former CEO of General Electric) http://www.gehealthcarefinance.com/OurSolutions/BestPractice/GE_empManageSystem.asp www.corporateleadershipcouncil.com GE’s ‘Session C’ Leadership Talent Assessment (bokharister@gmail.com) Read More