Case 5.1 : Companies Are Snfi'fng'om Evaluating Performance to Developing Talent: Will It M'oi'tvot'e Employees .9 Rigid rankings hinder the teamwork and risk-taking necessary for innovation. But what combination of methods works best'.j Holiday shopping. yearend deadlines. and emotional family dramas aren't the only stresses in December. 'Tis the season for some companies to embark on that dreaded annual rite. the often bureaucratic and always time-consuming performance review. The process can be brutal: As many as onethird of US. corporations evaluate employees based on systems that pit them against their colleagues. W and some even lead to the firing of low performers. Supporters say such "forced ranking" systems ensure that managers take a cold. objective look at performance. But the practice has increasingly come under fire. Following a string of discrimination lawsuits from employees who believe they were "ranked and yanked": based on their age and not merely their performance. fewer companies are using this controversial management tool. Critics charge that the system unfairly penalizes groups made up of star performers and hinders collaboration and risk-taking. always a concern for companies trying to innovate their way to growth. Even General Electric. the most famous proponent of the forced ranking system. has injected more flexibility into its performance management system in recent years. Historically. GE managers were required to divide talent into three groupsa top 20 percent. a middle i0 percent. and a bottom 10 percent. many of whom were shown the door. Today. GE has done away with annual performance reviews all together; instead. relying on frequent discussions between managers and employees and ongoing coaching by supervisors via an app called :LPDYQGErtperformance development at GE. Striking a balance between strict yardsticks and managerial judgment is something every company grapples with on a daily basis. Although finding a substitute for a rigid grading system is not an easy task. many organizations have done away with formal performance reviews in favor of informal. ongoing discussions and feedback sessions between supervisors and employees. The strategy here is that frequent feedback and coaching will help employees improve their performance and increase their motivation to do a better job and help organizations flourish. Recent research supports this idea: in a Gallup study. only 14 percent of employees strongly agreed that formal performance reviews helped them get better at their jobs. One upside to the recent pandemic and most employees working remotely is that many companies looked closely at their employee review process and made substantial changes. For example. filesharing service Box is encouraging more regular feedback between managers and employees and reduced its annual formal review cycle to one. rather than two. Goldman Sachs is trying to increase transparency in its employee reviews: managers will meet with employees three times a year and explain to workers how the various performance ratings from \"exceeding expectations" to \"partially meets expectations" are distributed among employees. In addition. remote work naturally forces supervisors and employees to schedule more checkins. an outcome that may have a lasting impact on performance reviews