I will always be a true believer in not only hiring right people, but also in using a certain management style that adds not only to the company bottom line, but the quality of experience for the employee. It is my firm belief that we need to divest ourselves of this "Forced Ranking" system and go about the business of finding the right people in the first place that fit within our business culture.
In a response to the continuing emphasis by some of using the Forced Ranking System as a tool to eliminate a subjective percentage (usually 10%) of the lower performing employees, Edward Lawler wrote an article a while ago that Diana Robinson summarized extremely well, in her article "The Top 10 Reasons Why 'Forced ranking' Quota Systems Don't Work."a
Here are the first four of the reasons listed here:
a
- Legal problems
The system invites legal challenges, and many courts have supported these challenges. Few companies are able to prove to the satisfaction of the courts that their quota systems accurately identify poor performers.
- The statistics don't work
The theory assumes a normal curve (large numbers of individuals around the middle, flanked by a few "top" and "bottom" performers on either side). In fact statistics relating to normal curves are usually attained only with thousands of individuals, and assume random placement. Few teams or departments have so many members, and one hopes that none place their employees randomly.
- Inequity across departments
Some teams or departments may consist entirely of superlative performers, yet in this system the bottom 10% will still be cut, whereas another team may be composed largely of poor performers, 90% of whom will be retained.
- Inequity within departments
Some teams may have many individuals with almost no differences in performance between them, yet supervisors are still forced to identify 10% for elimination. This can lead to charges of unfair treatment, and to lower morale.
These four reasons alone are enough to toss the system. To me it’s an easy and lazy way to deal with things that are much more complex than a system can handle. That’s why we manage. That’s why we need human insights and observation, instead of forced meeting of certain statistics that are assumed to exist within our companies.
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» W. Edwards Deming and Evaluation by Performance from ManagersRealm
The last of the Seven Deadly Diseases we’ll talk about for now is: Evaluation by performance, merit rating, or annual review of performance.a I talk about this in other posts in ManagersRealm here and here. Deming says this in... [Read More]
Tracked on: January 26, 2006 3:55 PM | Permalink to Trackback