Forced Ranking Performance Appraisal Method– Is it really required?

The recent media update about Yahoo’s Marissa Mayer’s plan to introduce Forced Ranking method of appraising employee performance has raised quite a brow. While there has been a lot of criticism from some corners, there definitely will be some in silent acceptance. Before I make my case, let me give you some insights into forced ranking performance appraisal method. 

Forced ranking (FR) is a performance intervention, which can be defined as an evaluation method of forced distribution, where managers are required to distribute ratings for those being evaluated, into a pre-specified performance distribution ranking (Cooper & Argyris, 1998). In theory, each ranking will improve the quality of the workforce. Managers rank workers into three categories: The top 20 percent are the "A" players, the people who will lead the future of the company. They're given raises, stock options, and training. The middle 70 percent are the "B" players, steady-eddies who are given smaller raises and encouraged to improve. The bottom 10 percent are the "C" players, who contribute the least and may be meeting expectations but are simply "good" on a team of "greats." They're given no raises or bonuses and are either offered training, asked if they'd be happier elsewhere, or fired. As many as one-third of Fortune 500 companies use such systems, says Dick Grote, author of "Forced Ranking: Making Performance Management Work." Forced ranking first gained attention at General Electric in the 1980s. This is amongst the oldest methods and was aimed at –

·         End manager tyranny on ranking employees equal thus being unfair to the high performers or deserving members.

·         It was in vogue in those days when Talent Acquisition was still Recruitment and HR as Personnel Management.

While we have successfully made a transition from Personnel Management to HR Management to SHRM and have the best of the breed information systems, social medial tools and techniques, forced ranking still finds its presence. Many from the classical school of thought would contest that we need to go the Jack Welch way and differentiate amongst high and low performers and chuck out the non-performers.

I have always observed – “How did the non-performers or low performers find a way into the system?” or “If they were fine at the time of entry, have we investigated the reasons for deteriorating performance?” This calls for a tightly integrated HR function where Talent Acquisition is coupled with Performance management & Talent Management/Engagement. This is where we actually create & deliver value for our organizations as Strategic Business Partners. The late Steve Jobs at Apple Computers built a team of A-Class players as he would believe that only A-class members can appreciate the work of other A-class players.

Coming back to Forced Ranking method, it ‘may’ work in a highly structured or process oriented organization such as GE while may not at Apple or Google or Pixar or at our organization – May-I Consultants. This is seen to have detrimental effect on risk taking and thereby innovations as members tend to play safe. Moreover, why do you even need such a setup when your focus is on building an A-class team right from your strategists to hiring managers?

So what to do?

·         Instead have your performance managers define role-specific strategic KRAs and aligned KPIs integrated with the organization’s business strategy.

·         Set the motivations right.

·         Appraise your members on the set KRAs and drive your achievement goals.

·        Don’t shy away from giving instant feedback and associated corrective action.

·         Plan appropriate Action Learning Programs before taking the exit route.

·         You don’t need Forced Ranking Method.

I rest my case.

Visit us at www.mayiconsult.com and get in touch with us for your HR & Management consulting needs.

Culture of Accomplishment - Deciding and Executing what Matters

This one stems from the several exit interviews, employee interactions and experiences of self and others. I have written this post more as a concept paper than an article.

The Problem:

High attrition, disengaged and disgruntled employees, low employee morale and thereby low productivity are issues that have plagued most of the organizations globally. The result is increased intrinsic and extrinsic cost for the organizations resulting in leaner bottom lines. Any action on cutting down costs results in a Catch 22 situation for the companies.

In a recent report released by SilkRoad, a HR software solutions provider, 86% of the employers struggle to create and maintain workforce engagement. In another article on ‘loyalty360.org’, ‘Measurement’ is termed as a weakness of employee engagement programs in terms of longevity and effectiveness. In the FORBES list of top 5 reasons for quitting jobs in 2013, stability, work-life balance and RESPECT have found mention. Two very important points can be deduced from all these articles, research papers and other literature on employee engagement and factors influencing employee longevity and effectiveness:

         1. The factors molding employee engagement are evolving.

         2. The premise on which employee engagement programs are based is flawed.

A Bigger Picture:

The only thing that is with the organization throughout its lifecycle and strongly influences its existence is its culture. Culture may get contaminated, invaded and normalized over the organization’s existence; however it exists. Culture is lasting; programs are not. Culture is what drives behavior, exchanges, morale and sets an unwritten agenda of how things are to be done and what is expected out of employees. It also strongly impacts the feelings, moods and emotional bursts that an employee may experience. Culture also channels the loyalty and longevity of the employees.

In my view which has crystallized with my experiences and those of others, culture has to be all encompassing and should stand for the values of the organization. A lot has been said and written about the culture of ‘Achievement’. However, there is very little mention of accomplishment in the organizational culture context. Elizabeth Curry, facilitator of the Sunshine State Library Leadership Institute makes mention of the following prominent cultures in her workshops:

1. Power Culture
2. Achievement Culture
3. Role Culture
4. Support Culture 

Curry states that one of above four cultures is prominent in the organizations while the rest though exist are not dominant. McClelland’s human needs motivation theory speaks of –

n(P) – Need for Power

n(A) – Need for Achievement

n(Af) – Need for Affiliation

My view of a culture emanating ‘accomplishment’ is the one in which all four – power, achievement, role, support are equally dominant and mutually interact with each other to collectively enhance the beauties of each culture thereby snowballing the overall positive impact on the organization.

Y Accomplishment:

“There’s nothing like seeing your own potential come to fruition and realizing your worth and intelligence as a human being”, quotes Mirella, a blogger in one of the blog posts. Besides, accomplishment caters to individualistic notions of accomplishment and thereby helps customize interventions to enhance individual accomplishments. A child’s sense of accomplishment may be very different from that of an adult. Even amongst children, the sense of accomplishment for a child playing soccer may be different from that of a studious kid. The beauty is even amongst soccer playing kids; sense of accomplishment for a goal keeper may be different from the one playing forward or center back. Same is the case with our employees in the organization and for that matter the employees in the same department or same team or subgroup. The other truly enticing quality of accomplishment is its inherent ability to sprout happiness within an individual.

The sense of accomplishment has longevity and also boosts your motivation to continue with your march – continuous accomplishment or path of new glory. Accomplishment can also be considered the pinnacle of an individual’s state of mind and heart.

In organizations, our employees may quit or may be disengaged or disgruntled citing reasons of insufficient compensation, opportunities, challenges, growth or even plain need for change or beat monotony. Understanding their sense of accomplishments helps the HR folks design, customize and drive interventions in the organizations. This also helps identify how individual strengths can be leveraged to deliver to the business strategy of the organization besides having happy employees at work. It is however important for HR folks to align individual accomplishments to the overall accomplishment of the organization. The organization’s sense of accomplishment may lie in earning revenues for its stakeholders, give back to the society, stand by environmental causes or just keeping all its primary and secondary stakeholders happy.

Culture of accomplishment goes a long way in helping us introspect on what example we wish to set for ourselves and others around. Also, deciding on what really matters and doing that.

 
I shall discuss on the tools and processes of enabling our employees in the next post. Till then, the point to ponder - Do we consider ourselves accomplished? 

Role of HR in Tough Times - Talent Perspective

Paradigm Shift and Talent Management:

 

We are witnessing a paradigm shift in the role of and perception about HR. The real challenge for HR function lies when the days are no longer sunny. There are two aspects to this – ‘Proactive HR’ and managing the paradox of being ‘Employee Champion’ and ‘Strategic Business Partner’. Let’s discuss both these scenarios.

We have been saying that HR has to be proactive. But then what is that ‘proactive approach’ we are talking about. When it comes to global economic downturn, the first measure that most organizations take is ‘downsizing’. A proactive approach would result in ‘Right-sizing’. There would be no need to cut the extra flab when the organization is already in shape. For this again, effective manpower planning has to be carried out and several analytical techniques can be used to get the count right. Scenario analysis is one such technique which can help us visualize different scenarios by juggling with several parameters. The Talent pool has to be just right. This also involves taking a long term view of things and avoiding myopic and tunnel vision to attain short term stability. We need to also understand that any economic crisis is a transient phenomenon and so we should not sacrifice vision for immediate short term gains. One excuse or explanation that comes from many organizations during downturn is that the non-performers are being retrenched. But my point of contention is – Why to wait for economic downturn to chuck out the non-performers. Besides, what could be the quality and effectiveness of selection procedures in these organizations so as to induce non-performers into the system? What has the learning and development team been doing all this while? 

 Its important to understand that 'Employees' are important stakeholders contributing to business success even in tough times and post that. HR being a business partner has to aid the decision making of Leadership team by presenting concrete rationale and do what is right for the business not only in the present but also in the long run while preserving the interest of the internal customers. An analogy that strikes me is that of a 'mother' in the family. 'Mother' always has to balance the act of the 'father' (Leadership Team) and that of the 'children' (Employees) for the emergence of a happy and loving 'family' (Organization). An organization should stand by its employees in the tough times which will build a culture of trust and loyalty. Employees will reciprocate by higher productivity and higher commitment levels. This is a simple human phenomenon – a psychological contract. As someone has said, “If you exceed someone’s expectations by a little, they will make sure to exceed your expectations by a lot more”. HR has to strike a balance between the employees’ needs and the business demands. SAS is one organization which has never retrenched its employees and has consistently figured in the ‘Great Places to Work’. This has a positive impact on the employees as a whole resulting in high motivation levels and sense of belongingness for the organization. Besides, other stakeholders – shareholders, suppliers, and customers take note of such initiatives and are highly appreciative resulting in better relations and more business. As stated earlier, a long term and far sighted view has to be taken. 

HR has to understand these realities and pitch for the most rational option. It is HR’s responsibility to make the management cognizant of the holistic picture and present the pros and cons of any decision before them in the language they understand. HR has to take the Central Stage and make a mark.