HR Summit 2018: When HP abolished performance ratings
Since HP Inc. split from its sister enterprises arm, the maker of PCs and printers has gone from strength to strength. It is now the top maker of PCs by global market share.
And it involved one somewhat radical step – namely, abolishing performance ratings.
Nicolina Marzicola, Regional Head of HR for HP in Asia-Pacific and Japan, spoke about this and the organisation’s new “Intentional People Strategy” at the HR Summit & Expo Asia 2018, taking place at the Suntec Singapore Convention & Exhibition Centre on May 9 and 10.
“We abolished performance ratings in six months,” said Marzicola. “We did think, ‘holy moly, how are we going to do this? What’s going to happen when we communicate this?”
The HR team made sure to help the rest of the company prepare for the change by preparing the relevant communications campaigns and manager toolkits.
“Three years later, this is probably the coolest thing we did in HR – and the best thing for HP,” said Marzicola.
Essentially, eliminating performance ratings also meant eliminating the work required produce a rating distribution. Managers now had much more time to channel into other tasks.
“What it allowed our managers to do is to spend more time looking at the performance goals that were set, and evaluating the performance of their teams and employees,” said Marzicola.
“They spend more time writing quality performance evaluations, thinking about how they are going to communicate that to employees at end of the year, and discussing performance and development goals for the next year.”
Further, she added, the response from the rest of the company resoundingly endorsed the move.
“We got so much response from managers and employees telling us the same we felt in HR: that this was the best thing ever. People were saying, ‘I feel like I’m having candid conversations with my manager about performance that’s not directly tied to a letter or a number.’”
Marzicola also noted a surprising effect: “The rewards, salary increases, and bonuses, have a better distribution now than when we had ratings.”
“That was the biggest aha for us,” she noted. “And we thought, if we can do that in 6 months, what else can we do?”