General Motors (GM) is overhauling its performance evaluation system for salaried employees in the US. The move is aimed to better reward top performers and press low performers to improve or leave.
The new strategy includes awarding the top five per cent of employees with 150 per cent bonuses, an increase from the previous system. This will also help the company to attract and retain the talent needed to fulfil its ambitious goals as it transitions to electric vehicles.
The new performance- ranking system, detailed in an internal memo, introduces a five-scale evaluation range. Ranking starts from ‘significantly exceeds expectations’ and goes up to ‘does not meet expectations,’ with bonuses being tied to these rankings. This change impacts GM’s approximately 53,000 salaried employees in the US. The updated rankings will be used during year-end performance reviews.
The new system at GM adds a top and bottom tier to the previous three-category evaluation method. Around 70 per cent of the organisation is expected to fall into the ‘achieves expectations’ category, receiving 100 per cent of their target bonuses. Meanwhile, approximately five per cent categorised as ‘does not meet expectations’ will face ‘appropriate action,’ potentially including termination.
This performance-focused culture is seen as essential for attracting and retaining top talent in the competitive automotive industry. As per Reuters, a GM spokesperson highlighted the company’s commitment to fostering and rewarding high performance, which includes clear expectations, developmental feedback and performance-based rewards.
The move to a five-point scale is a common approach, allowing for a more nuanced differentiation of employee performance, according to experts. While the changes may result in incremental costs related to bonuses or severance packages, they often enable companies to allocate funds more effectively, paying employees according to their performance.
