Bristol-Myers Squibb (BMS) is one of the world's largest pharmaceutical firms and is widely known for its innovative research

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Bristol-Myers 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 were "form focused," meaning that they were so concentrated on filling out the performance review forms, the content of the forms was not being used for employee coaching and based on development. Also, most of the attention of managers and employees was historical and based on what employees had done in the past. Little attention was being given to how employees could develop and improve in the future.

The most radical steps taken were to totally eliminate the appraisal forms and their rating scales and to 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 review performance goals expectations. Together they set expectations and timelines for accomplishing the 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, rather than just getting their ratings on forms and then passively listening to the managers. Also, a greater amount of time is spent on coaching because managers were trained on use of a guided feedback approach. This approach has led to more discussions in which employees and managers emphasize joint problem solving and goal achievements. Although the system takes more managerial and employee time, the coaching and employee involvement have created a more positive relationship and improved individual and managerial performance.

Questions

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

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