Dick Grote’s Performance Management Blog Blog Has Moved February 12, 2007
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The Rationale for Forced Ranking January 15, 2007
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There are certainly concerns about the forced ranking process I mentioned last time. Turns out, most of those concerns are actually benefits.
First objection—it’s arbitrary. Well certainly using a predetermined distribution (like top 20 percent, vital 70 percent, and bottom 10 percent) is arbitrary—and that’s its great value. Using fixed and arbitrary percentages forces managers to make tough decisions about who’s an A player, who’s not, and why not. Otherwise, as happens in too many performance-appraisal systems, everyone gets rated superior, managers never have to have tough conversations about performance, and the organization slowly slouches toward mediocrity. Restricting the number that can fall into the A category, and demanding that managers identify a bottom 10 percent who, relative to their peers, are weaker performers, ensures that top talent is recognized and that those bringing up the rear have no false sense of security.
Of course, if you ranked a hundred people using a 20-70-10 process, #21 would be much closer in performance to #20 than she is to #90. That’s why companies that use the forced-ranking process tailor the actions they take with individuals to the individuals themselves, not just to which ranking bucket the person ended up. When I write scripts for managers to use in letting people know how they came out in their company’s A, B, and C player analysis, I develop five scripts, not just three: for the solid A player, the B+ (the #21 guy and his counterparts), the genuine B, the B- (the ones who barely avoided falling into the C category), and finally the true C level performer.
But it is important to use buckets in making relative comparisons (e.g., top 20, vital 70, bottom 10; or quartiling, or some similar scheme). Never ask managers to precisely rank their people in exact performance order. It’s impossible to distinguish between #20 and #21, and the totem-pole approach (who’s #1, who’s #2, and so on down until the last and worst performer is fingered) generates highly valid concerns about accuracy.
Yes, forced ranking is an imperfect process, as is any process in which fallible human beings must make tough decisions in an arena where solid, unarguable, quantitative data don’t exist. The forced-ranking process requires the exercise of honed, objective managerial judgment in a situation where information is always incomplete and the facts are sometimes contradictory. But managers make decisions based on limited data all the time—which projects to fund, which to shelve; when to react swiftly to a competitor’s move, when to let time take its course. Just because a decision isn’t based on countable units doesn’t mean it isn’t objective. Employee ranking is not the same as solving an algebra problem—it can’t be reduced to a mathematical formula.
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360-degree Feedback and Forced Ranking January 8, 2007
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Here’s a way to improve performance appraisal. And a way not to.
First, we need to forget about 360-degree feedback, at least for performance-appraisal purposes. Certainly, 360-degree feedback may have a place—a minor place—in helping people get a better understanding of their development needs. But it has no place in conventional performance appraisal. To allow anonymous employee assessments into part of the formal evaluation tool does more than just encourage biased and self-serving responses—it poisons the entire well in terms of the original objective. It is particularly inappropriate to tie pay, promotions, development opportunities, and terminations—the things that a strong appraisal system controls—to anonymously provided assessments. The issue is not whether underlings and co-workers can provide relevant information. They can. The issue is whether they should be allowed to do so in a context where they cannot be held accountable.
What we need to do is add some element of forced ranking to our performance-management processes. Forced ranking requires senior managers to look over the organizational talent pool and, based on their performance and potential, identify the organization’s top talent (the A players), the solid-performing middle (the B players), and those bringing up the rear (the C players). Forced ranking can drive the truth into performance management, since not only does it force managers to identify the organization’s most and least talented members (and in the process provide the organization with useful data on managers’ ability to spot and champion talent), it offers independent verification of performance-appraisal data, something everyone agrees is important.
Conventional performance appraisal involves an absolute comparison — how well did the individual perform against the goals and key job responsibilities and competencies that were agreed at the start of the year? Forced ranking requires a relative comparison—how well did this individual perform compared with how well other people in similar jobs performed? Both questions are important to ask to get a complete view of a person’s performance.
Sure, there are challenges involved in implementing a forced-ranking system. Some employees and some managers, particularly those with low standards, don’t like it. And it’s inevitable that some mistakes will arise—you’re bound to miss a few late bloomers and overrate a few glib duds.
But combining a forced-ranking system with a conventional performance-appraisal system, with senior managers holding their juniors accountable for excellence in performance management (just as they hold them accountable for excellence in all the other parts of their jobs), will produce an organizational climate in which people know what’s expected of them, are held to high standards, and know exactly how well they’re doing. Sounds like a great place to work!
Dick Grote is one of America’s most successful and best-known authors, consultants, and business keynote speakers on performance management. He is the Chairman and CEO of Grote Consulting Corporation.
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How to Mend Performance Appraisal January 1, 2007
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So far we’ve considered a couple of key issues. First, we agree that getting accurate performance information to people is an important ethical responsibility of leadership, even though a lot of managers don’t like the process their company asks them to use. Second, we realize that there are some bumps with the way the system works. But my response to attacks on performance appraisal’s shortcomings is the same one Bill Clinton used when defending affirmative action: “Mend it, don’t end it.”
Here are some ways we can mend it. First, companies must raise their expectations about the quality of appraisal execution, setting their minimum standard for getting appraisals done at 100 percent uncomplaining compliance. If a manager’s sluggishness in completing an appraisal means that a subordinate’s merit increase is delayed, HR shouldn’t let him off the hook by automatically making the increase retroactive. I feel he should take the heat of explaining to Sally why her slothfulness in getting his appraisal written caused her to miss out on a salary increase for a pay period or two. That’ll cause appraisals to be delivered on time!
Second, top executives must threaten significant consequences if managers don’t take the process seriously. Hunt Oil’s performance-appraisal process, for example, requires every manager to discuss thirteen open-ended performance-related questions with each subordinate every March. The only writing the system requires is a memo each manager has to send to CEO Ray Hunt by March 31, saying either that he has conducted all her discussions, or that he hadn’t done so along with an explanation of the reason why. And that explanation had better be good, since on April 1 Hunt picks up the phone and starts calling. As Hunt’s VP of HR explained, “You don’t want to get that call from Ray Hunt.”
Another great way to build accountability is to insist that senior managers review and sign off on all performance appraisals before the supervisor who wrote them can sit down and discuss them with her subordinates. This review requirement not only helps assure timely completions—it boosts inter-rater reliability by making sure that people who perform at the same level of quality will get the same appraisal rating, whether the appraisal is written by manager A, manager B, or manager C.
Most important, the reviewer—the senior manager—can guarantee that tough-minded, demanding performance standards are set. Some managers (like some college professors) are more lenient than others. The reviewer can make sure that the standards of the department’s toughest appraiser set the bar for everybody else. That’s the best way to counteract the Lake Wobegon effect, in which everyone is rated as Exceeds Expectations.
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Why Do We Need a Formal Process for Performance Appraisals? December 18, 2006
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There’s no question that discussing expectations and coaching and feedback should be a routine and ongoing process. And some managers—the great ones, the naturals—do these things routinely. But managers such as this are few and atypical. Left to their own devices, too many people with manager titles will give the goal-setting and feedback requirements short shrift. They’ll stick it on the “when I get around to it” pile.
That’s why we need a formal process. Sure, the ideal is to have an environment of constant feedback and communication. But an environment like that is rare. That’s why it’s important to require managers to—at a minimum—discuss goals and expectations with each staffer at the start of the year, and then, at year’s end, evaluate just how well that person has done.
Reliability and validity are certainly worthwhile concerns about performance appraisals, and much of the research in academic journals focuses on the problems and deficiencies here. But academics tend to make a much bigger deal of this issue than practitioners do. No argument—reliability and validity are important. But companies aren’t psychology research labs. The question to which every employee wants the answer is, “Boss, how am I doing?” While on an organization-wide basis the overall reliability and validity may not meet the rigorous standards of academia, on an individual basis, if people are getting the straight scoop from their boss on their performance, that’s OK.
Don’t forget what a performance appraisal is. A performance appraisal is a formal record of a supervisor’s opinion of the quality of an employee’s work. Opinion is the operant word here, and if that opinion can’t meet exacting tests of reliability and validity, that’s OK. We’re trying to run a business here, not write a Ph.D. dissertation.
But there is some good news here. Many companies are genuinely concerned with increasing reliability and validity and are setting up calibration meetings or “rater reliability” sessions. In these meetings, supervisors review with each other the performance-appraisal ratings they’re planning to give their subordinates before they actually hand them out. They check each other’s intended ratings before they’re made final in order to assure that people who work for different supervisors are held to similar standards and that there’s a level playing field for all.
tags: Performance Evaluation, Dick Grote, Performance Appraisals, Performance Reviews
The Complete Guide to Performance Appraisal Book December 6, 2006
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Unlike most technical or professional books, The Complete Guide to Performance Appraisal is extremely personal and forthright. Author Dick Grote has worked with performance appraisal techniques for more than a quarter century, and he tells you which methods have been successful and which have flopped. And Grote writes in a style that’s so enlightening and engaging you’ll feel impelled to keep on reading. |
Discover the quickest, surest methods for making your appraisal system a winner. Whether you’re looking to get the maximum impact from your existing system, or you want to create and implement an ideal system from scratch, The Complete Guide to Performance Appraisal is your one-stop, how-to-do-it resource. You’ll find candid, informed, on-the-mark solutions to every question you have about performance appraisal. (more…)
