The Strategist

Personnel assessment hinders teamwork and enhances staff anxiety

05/27/2016 - 15:47

Goldman Sachs will no longer rate its employees on a productivity scale of one to nine. Instead, the bank employees are now asked to constructively communicate with management.

Goldman Sachs banking group has decided to change method of employees’ performance evaluations. In June, the company will cease to assign ratings on a scale of one to nine. In the autumn, Goldman will begin testing an online system through which employees can communicate with the management about results of their work, according to The Wall Street Journal citing the company’s internal materials.

"We asked Goldman staff for a more frequent and constructive feedback," - said Edith Cooper, who oversees management of human resources at Goldman Sachs.

Other large companies are also changing the policy on staff performance evaluation now. For example, leaders of Gap, Adobe Systems and Microsoft also put away the rating system evaluating staff’s performance. They say that such a method only harass employees.

Accenture PLC consulting firm recently completely abandoned the annual reports on performance in favor of more frequent interaction between managers and employees. General Electric is testing a similar system with a part of its staff as well.

Goldman Sachs is not completely abandoning the annual performance reports. Instead, the bank has decided to focus on providing specific guidance to employees to improve their work, rather than classifying their progress from the previous year in the numbers. 

David Rock, director of NeuroLeadership Institute research firm, tried to use neuroscience to improve workflow. He was confident that the ratings give rise to the public's sense of danger, especially if the score is at odds with the expectations of the employee. This is a huge stress, and some people need months to recover after this.

For several years, companies have experimented with management style, giving up the hierarchy, or transferring employees on ‘open-leave’ schedule. However, methodologies for assessing the effectiveness using the scale of 1 - 5 points, or marking people as "meet expectations" still seem to be quite popular. There are rare exceptions. Companies like Gap, Adobe Systems and Microsoft have eliminated all of these ratings. The management has considered that they only increase anxiety among employees.

Companies abandoned evaluation of effectiveness claim that the employees began to feel more confident and listen to the opinion of the leaders themselves, instead of staring at the rating’s figures. John Ritchie, a Microsoft human-resources executive, said that such ratings discourage staff from risking and cooperating. Ever since the company got rid of them in 2013, the teamwork has become a much more effective.