Brief summary of the case study
The modern business environment is dynamic and competitive. My supervisor often says “we create our own futures,” meaning employee performance ensures retention or the opportunity to move to a new company. This week’s case study discusses the importance of force ranking and performance assessment. Each year my company conducts individual performance assessments which add more anxiety during the holiday season. Many companies like GE, Microsoft and American Airlines have adopted this strategy but now they are becoming more flexible because they are being highly criticized because of their way of evaluating employees (Irvine, 2012). Companies are now implementing innovative techniques to evaluate their employees, so that better retention can be achieved.
Opinion regarding forced ranking performance appraisal
I think this topic is similar to most emotionally charged issues, you can find studies and articles which support both the advantages and disadvantages of forced ranking. Usually when I analysis a complex, emotional topics, I tend to land somewhere in the middle. When I was serving within the military as a commissioned officer we used a forced ranking system to identify officers for promotion and retention and for increased responsibility and potential based on their individual performance. No system for evaluating people is flawless but I did see some benefits to forced ranking, although in the end I feel these benefits are outweighed by the managerial problems it causes.
The biggest advantage in my opinion is it does force managers to have hard conversations with employees that they might otherwise have avoided. I believe forced ranking does bring discipline to the management process. As any manager knows, it’s often easier to avoid difficult, painful performance-related conversations than to confront them head on. Though some managers are outstanding in dealing with conflict, many prefer to avoid or minimize it (Irvine). In a forced ranking system, managers and employees have no place to hide. It literally forces performance issues to be addressed and for an organization that wants to formalize its management processes, I believe the system can have benefits.
The disadvantage I see is that it causes employee morale problems. We currently use several General Electric business processes to include forced ranking with my current employer. As a manager the discussions I have about the fairness of bonus payouts were not nearly as problematic as those I routinely came to have over end-of-year rankings. Despite considerable management communication on the topic, many employees still felt like they were getting lower assessments than their peers and that bred discontent. Another issue forced ranking created for me was that the system resulted in a heightened focus on individual performance and did little to promote team building which is always valuable in a business environment.
Equity theory and negative reactions to forced ranking
The equity theory focuses on employees being treated fairly in a work environment. This theory shows how employees react to the forced ranking method. In many cases employees feel the ranking method violates employee’s rights. Causing some lawsuits and accusing the employer of discrimination (Osborn & McCann, n.d.). The equity theory really shows how losing a promotion and not receiving a raise really affects the employee motivation and commitment to the corporation. Employees want to be treated equally and when they're not there's no motivation. Employees will lower productivity, quality is reduced, you have an increase in absenteeism, and voluntary resignation.
I feel the biggest weakness with forced ranking is that most supervisors aren’t properly trained to evaluate performance and there are no established evaluation criteria from one supervisor to another (Sprenkle, 2002). This makes most evaluations more subjective and less objective. Supervisors are humans too, we all have preferences to different type of employees and some identify with a certain demographic than others. Leaving the success and future to one individual through a flawed evaluation assessment means there is never one set standard which leads to employee morale issues not to mention equal opportunity and wrongful termination lawsuits.
Creative alternatives for motivating employees
I’ve been part of various performance assessments during my combined 30 years in the workforce both during military service and in the private sector. Ultimately I believe all the processes I’ve been exposed to were acceptable but the key factor for all of them was how they were implemented. In my opinion the one I found most useful was the 360-Degree Compass Check or 360-degree feedback.
The strength of this assessment tool is instead of relying on one supervisor to evaluate an individual’s performance as is usually the case with forced ranking, employees get feedback from several layers with whom the employee interacts with (Heathfield, n.d.). It can be from superiors, peers, subordinates and even clients. That’s the idea behind 360-degree feedback, to collect performance data from a number of stakeholders, all of whom have a different vantage point to an employee’s performance (Linman, 2013). When it’s done well, 360 programs allow all your team members to improve in key areas that might be limiting their upward career path or actually causing major conflict within a team.
Heathfield, S. (n.d.). 360 Degree Feedback: The Good, the Bad, and the Ugly. Retrieved from http://humanresources.about.com/od/360feedback/a/360feedback.htm
Irvine. D. (2012). Why Forced Ranking Performance Management Should Die. Retrieved from http://www.recognizethisblog.com/2012/01/why-forced-ranking-performance-management-should-die/
Linman, T. (2013). 360-degree Feedback: Weighing the Pros and Cons. Retrieved from http://edweb.sdsu.edu/people/arossett/pie/Interventions/360_1.htm
Osborne, T, McCann, L. (n.d.). Forced Ranking and Age-Related Employment Discrimination. Retrieved from http://www.americanbar.org/publications/human_rights_magazine_home/human_rights_vol31_2004/spring2004/hr_spring04_forced.html
Sprenkle, L. (2002). Forced Ranking - A Good Thing for Business? Retrieved from http://www.workforce.com/articles/forced-ranking-a-good-thing-for-business