Bristol Meyers-Squibb (BMS) is one of the world’s largest pharmaceutical firms and is widely known for its innovative research. But the firm has not limited its innovations to products. Several years ago, BMS leaders decided that the company’s performance management system needed to be re-invented. Specifically, they determined that the existing performance appraisal process was not working. Managers had become “form focused”, meaning that they were so concentrated on filling out the performance review forms, that the content of the forms was not being used for employee coaching and development. In addition, most of the attention of the managers and employees was historic in nature and not based on what employees had done in the most recent evaluation period. Subsequently, little attention was being given to how employees could develop and improve in the future.

The most radical steps taken to remedy the situation were to totally eliminate the appraisal forms and their rating scales and request that managers not discuss pay increases during performance review sessions. Instead, a new “performance partnership” became the focus. At all levels of BMS, managers were trained to hold regular meetings with their employees. At these meetings managers and employees reviewed performance goals and expectations. Together they jointly set reasonable and obtainable expectations for accomplishing their goals. Rather than meeting just once a year, the performance partnership update occurs throughout the year.

The changes in the performance management system have led to several positive results. First, employees are more active participants in the process, rather than just getting their ratings on documents and then passively listening to their manager’s explanation of the results, In addition, a greater amount of time is spent on coaching because manages were trained on the use of a guided feedback approach. This approach has led to more focused discussions in which employees and managers focus and emphasize joint problems aimed to solving problems and goal achievement. Although the system takes more managerial and employee time, the coaching and employee involvement has created a more positive relationship and improved both individual and managerial performance.

Questions:

1. Discuss how this case illustrates the contrasts between the administrative use and development of appraisals.

2. Identify some of the advantages and disadvantages of eliminating the use of appraisal forms and ratings.