IBM Consulting has announced a significant change in its performance management system, aiming to align employee pay more closely with performance metrics. This initiative, communicated to employees through an internal memo, reflects the company’s ongoing efforts to adapt to market demands.
The new performance reviews will occur annually, utilizing an SAP SuccessFactors tool. Reviews will focus on three key dimensions: business outcomes, skills, and behaviors. Each employee will receive a rating of ‚Met‘ or ‚Not Met‘ across these dimensions.
According to the new scoring system, 15 percent of employees will be classified as ‚top performing,‘ 70 percent as ‚core,‘ and 15 percent as ‚low.‘ This classification will directly influence the Growth-Driven Profit (GDP) payouts, with top performers receiving twice the GDP funding, core performers receiving the standard amount, and low performers receiving no funding.
IBM aims to improve its ability to differentiate and reward high performers, addressing past shortcomings in its incentives program. The company reported a revenue of $20.84 billion for its Consulting division in 2024, a 2 percent decline from the previous year. The profit margin also decreased from 10.2 percent to 9.9 percent.
In light of these financial challenges, IBM is pursuing $3.5 billion in productivity initiatives this year. The revamped performance metrics will likely play a crucial role in identifying employees who do not meet the company’s expectations.
For further details, visit The Register.