It was developed and implemented in June 1992 in the 150- person Materiel Division as a pilot for the entire plant. Team leaders become the primary customer because they controlled merit increases under the traditional system. These systems did not measure the most important internal and external customer perceptions, were subject to too much reviewer bias, and promoted individualism instead of teamwork. Initially, the appraisal form utilized the existing human resources appraisal format and performance evaluation categories. These have been modified several times based on employee feedback and benchmarking data from other companies.
Participation is mandatory for an employee to be considered for merit pay.
The employee randomly chooses three internal customers, three external customers, and completes a self review. Random selection of reviewers is left to the honor of the employee, and reviewers are not required to sign the appraisal form. Feedback provided to the employee includes copies of the seven reviews including all comments, a summary report showing the ratings and averages in each evaluation category, a report showing averages for the team, a division averages report, and a documented explanation of how the system works. Copies of the seven reviews plus a document signed by the employee indicating receipt and understanding of the reviews is retained in the employee's human resource personnel file. Surveys of the employees using this approach have indicated that employees liked this system over the traditional system, considered it to be fair, and believed they learned more about their performance than before.