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.
