Case Study

Performance Reviews by the Numbers

When Maria Giraldo began her job as a nurse at Long Island Jewish Medical Center (L.I.J.M.C.) nearly 12 years ago, performance reviews were conducted using a 10-page paper form that asked managers to score her on qualities like “leadership” or “respectfulness.”

“They were very subjective,” says Ms. Giraldo, who is now a nurse manager in the intensive-care unit at L.I.J.M.C. She was often graded on intangibles like how well she worked with others, which Ms. Giraldo says were important but open to interpretation.

But three years ago her hospital implemented a new computer-based performance system that broke her job description down into quantifiable goals such as to keep infection rates for her unit low and patient-satisfaction scores high. When review time came, the discussion didn’t dwell on how she had performed—either she had hit the goals or she hadn’t.

It’s the same sort of hard-facts review system that many organizations in the U.S. are adopting. And it’s changing the way companies and professionals view success and how to get ahead in a career.

Knocked around by the recession, U.S. businesses are trying to overhaul evaluations in a way that better separates top performers from underachievers. According to Hewitt Associates, 10% of managers and 11% of other employees are now judged based solely on the results they achieve, as opposed to a combination of hard figures and softer behavioral characteristics, such as demonstrating corporate values or showing leadership, up from 7% and 8%, respectively, five years ago. Nearly a third of professionals at an executive level are evaluated based solely on results, up from a little more than a fifth in 2005.

In the North Shore–LIJ Health System, the old, subjective evaluations had led to the corporate equivalent of grade inflation, say officials. “The chance of earning a good score was almost guaranteed,” says Joseph Cabral, chief human resources officer of the health system, which has 15 hospitals and 42,000 employees in New York and Long Island.

Now, rather than a subjective score from a manager, nurse performance is directly judged by how high patient-satisfaction scores are. One key reason the hospital system changed its performance reviews: By October, many insurers plan to pay hospitals for care based in part on patient satisfaction—which will be collected by surveys after patients are discharged. If the North Shore–LIJ Health System’s scores had stayed where they were, Mr. Cabral estimates the change would have cost it at least $55 million annually.