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It’s an exciting time to be in the field of leadership development, but it’s also a time of uncertainty and upheaval. Technology is transforming the way we do business. Will your organization be able to stay competitive in the face of the change coming at you at lightning speed?

Janice Semper has an expression summing up today’s business climate: “Passion and panic.” Janice is the head of culture at GE and one of the foremost thinkers in the field of leadership development. I had a chance to interview her on the occasion of my one-year anniversary of my radio show, iLead: The Leadership Connection, where we talked about the cultural transformation at GE and how to bring performance management into the 21st century.

Why GE is still around after all these years

GE knows all about change: over the years, the company has reinvented itself over and over. “It’s about GE’s survival, quite honestly,” Janice told me. “If you look at what’s happening in the world today, we can’t stay still. We have to continue to evolve how we work, how we think, and how we compete.

“We’re in a very unique period of time where I think we’ll probably see one of the bigger transformations we’ve ever made in the organization.”

Janice pointed out that GE is the only company still in existence that was on the original Dow Jones Industrial Average. The company’s drive to move forward and develop leaders is part of its heritage, and it’s helped keep GE alive for over 135 years.

“It goes way back to the early days where the leaders, the chairmen, and the CEOs at the time really believed leadership development was a competitive advantage,” Janice said. “No matter in good times and in bad times, it’s one of the core values of the company. You just don’t touch it.”

Rethinking the performance process

GE’s vision for the 21st century is to become a “digital industrial” company, Janice told me. “To achieve that, we have to transform the way we work. And a big part of that is our performance management process. Because that really guides how individuals work in the company. It reinforces behaviors. It drives accountability.

“Our performance management process was introduced in the 1970s and it had a really good run, but it worked in an environment that was different. Growth was on a different trajectory. We weren’t as global. It was just a different time and place. We stopped and said, is that a business process that still works in the context of today’s world? When we actually talked to our employees, managers, and our senior leaders, what we learned is that it wasn’t really working anymore.”

The leaders at GE realized they weren’t tapping into their talent and helping their employees operate at their highest potential level.

“What we did was design what we call a new performance development approach,” Janice said. “We looked at our employees and our managers as the customers, if you will, of this new approach. We said, what would be a successful outcome from their perspective? Not from an HR perspective, but from their perspective? We spent a lot of time talking to them and understanding what their needs were.

“I think that’s helped us learn a lot,” she said. “It’s helped us to get to a better outcome — one where our employees and leaders are getting the results they feel are important.”

New language leads to new behaviors

GE discovered that using the same old terminology to measure performance meant people interpreted things through the same old lens. “You have to figure out how to give people a new lens,” she said, “a new way of looking at something. So one of the things we’ve done with the new performance development approach is to introduce a new language in the company.”

Janice offered a couple of examples. “We moved away from setting individual goals and objectives to what we call priorities. When you talk about work in terms of priorities, you automatically ask the question: am I working on the most important things? We felt that that was the conversation we needed our employees to be having with their managers. Are we doing the things that are most important to our customers?”

This reframing allows the company to adjust its work throughout the year based on what’s most useful to its customers. “If you set a goal at the beginning of the year, it’s hard to shift that goal — to say ‘I’m not going to do that anymore because we’re going to be held accountable to that goal,’ ” Janice said. “It’s subtle, but it’s pretty powerful, because it just changes the conversation.

“Another term we use differently is that we moved away from the term ‘feedback.’ People hate that word. It causes them to sort of brace for bad news and they stop really listening. We introduced the world ‘insight,’ because essentially, what you get from feedback is an insight. By framing it as an insight, it does take a little bit of that fear away.”

That simple change helped free up the exchange of dialogue in the company and created an environment where people can share insights with each other with the intention of making them a more effective member of the organization.

Moving away from the ratings system

GE has begun experimenting with the concept of doing away with performance ratings. “Quite honestly, we didn’t jump into it right away,” Janice said. “One of the reasons is, we’re a company that were at the forefront of ratings from the beginning. They were a big part of how we looked at talent assessment and development, and they did become the basis for a lot of talent decisions.

“Last year, we actually tested having no ratings. So we were able to look at how well we managed to reward talent without a rating. Because that’s the big question: if you don’t have ratings, how do you know how much to reward people?”

Using control groups, the experiment showed that managers who didn’t use ratings were able to differentiate employees at the same level as managers who did. “What we learned was that these leaders were having more frequent conversations with their employees. They had a greater line of sight into the contributions their employees were making. So they actually had more data than they’d ever had to be able to make those talent decisions.”

Not only that, but employees didn’t miss having ratings. “They understood why they’d received the reward, because the manager was able to give them more information and articulate it better,” Janice said. “They all said it was just a better conversation. It was richer. We focused on what was really important, and the rating was a distraction, frankly. And everybody — at least the employee and the manager — got more out of the discussion, which set them up for the year in a much better way.”

Challenges still to overcome

It’s not enough, Janice said, for a company simply to introduce a new performance management process. It also needs to work on changing people’s behavior. “Our measure of success comes down to: do we see the behaviors in the organization that we want to have? Do our employees and managers feel an impact?” she said. “And quite honestly, that takes time. You can’t just do one training session and call it a day. You have to have ongoing enablement, you have to build new muscles in the organization. It really takes a concerted effort.”

Another big change will be the role of HR. In its former incarnation, HR departments were tasked with ensuring compliance in the system. Now, they’ve become enablers and coaches, rather than just tracking activity levels.

In the future, Janice believes, leaders will need to be better systems thinkers, learn to integrate data and intelligence more quickly, and to become extremely tech-savvy. In addition, companies will have to become even more laser-focused on their customers than they already are. “That’s a leadership trait that may sound basic, but it’s really hard to do,” she said. “To be able to truly understand your customers’ needs and to design solutions to meet their needs is a key characteristic.”