GM raises bar for employee performance with new ratings system

New five-tier system replaces previous three-tier system

Employees will be evaluated on a scale from "significantly exceeds" to "significantly below expectations"

DETROIT, Aug. 1 (Reuters) - General Motors GMN is changing the way it rates the performance of its employees, implementing a new five-tier employee performance ranking system in place of the previous three. The new system adds a top and bottom tier to the previous three-category one, which separated employees into "exceeds expectations," "meets expectations" and "needs improvement." The new system will evaluate employees on a scale from "significantly exceeds expectations" to "significantly below expectations.

The new system is designed to "more accurately reflect the full range of employee performance," according to an internal memo viewed by Reuters. The memo said that the new system will "help managers to more effectively differentiate between employees who are performing at different levels" and "provide employees with more feedback on their performance." It is not immediately clear how the new system will affect employee compensation or promotions.