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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Performance appraisal facilitates layoff or downsizing decisions November 20, 2006
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If promotions are what everybody—or almost everybody—wants, layoffs are what everyone wishes to avoid. But when economic realities force an organization to downsize, performance appraisal helps make sure that the most talented individuals are retained and that only the organization’s marginal performers are cut loose.
Without a solid and trustworthy performance appraisal system in place, real companies are going to be reduced to the level of government bureaucracies when the time comes to reduce headcount. They’ll avoid making tough decisions by using the last in/first out approach, rewarding seniority and tenure rather than talent and ability.
But aren’t talent and tenure correlated? Many times they are. But only a good performance appraisal system can tell you for sure.
About the Author
Dick Grote is one of America’s most successful and best-known authors, consultants, and speakers on performance management. He is the Chairman and CEO of Grote Consulting Corporation – http://www.groteconsulting.com
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Is performance management all that important? October 9, 2006
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Is there any management process that is as mocked, as resented, as disparaged as performance appraisal? Scott Adams might have to retire his Dilbert cartoon if he didn’t have performance appraisal to lampoon.
And the way that performance appraisals are done in too many companies makes it easy for the scoffers to scoff and for Scott Adams to find a wealth of material to satirize.
But let me be blunt. Performance appraisal, mocked as it may be, is genuinely important. Lets look at all of the different organizational purposes a performance appraisal system serves. And then, in the entries to come, I’ll explore each one and why it’s important. Performance appraisal:
- Provides feedback to employees about their performance
- Helps determine who gets promoted
- Facilitates layoff or downsizing decisions
- Encourages performance improvement
- Motivates superior performance
- Helps set and measure goals
- Identifies poor performers for correction or termination
- Helps determine compensation changes
- Encourages coaching and mentoring
- Supports manpower planning or succession planning
- Determines individual training and development needs
- Determines organizational training and development needs
- Confirms that good hiring decisions are being made
- Provides legal defensibility for personnel decisions
- And finally, if it’s done right — improves overall organizational performance
About the Author
Dick Grote is one of America’s most successful and best-known authors, consultants, and speakers on performance management. He is the Chairman and CEO of Grote Consulting – http://www.groteconsulting.com
Overcoming Defensiveness in Employee Performance Evaluation Discussions April 12, 2006
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There sits Sally on the other side of the desk during her performance evaluation. She’s scowling. Her arms are folded tightly across her chest. Her lower lip is turned out in a way that communicates both rejection and contempt. She’s flipped the performance evaluation she just read upside down on your desk as though it were some loathsome bug. She slowly shakes her head back and forth in a model of negativity. Looking you straight in the eye, she says, “Do you call this a performance evaluation?”
George is exactly the opposite. His employee performance evaluation, like the one you wrote about Sally, also told the truth about the fact that the quality of his work in the past twelve months wasn’t all that you expected and that immediate improvement is required. But George isn’t arguing; he isn’t negative in the slightest. In fact, he’s bafflingly positive about the negative review. He says that he agrees with everything you’ve said and tells you that you don’t have to give him any details or examples. You’re right, he says. He understands. He’s so contrite and remorseful, you almost feel apologetic about having written such a negative — but honest — evaluation. He promises to turn over a new leaf immediately and asks if there’s anything else you need as he gets up and starts walking out the door. (more…)
Get Your Performance Appraisal Discussions Off to a Good Start (Part 2) April 12, 2006
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In a previous article I shared a couple of tips that will reduce the feelings of discomfort that often come when a performance appraisal is discussed — gather your materials in advance, make a list of the key points you need to cover, and pick an appropriate place for the discussion. Here are four more suggestions that will make the performance appraisal discussion more relaxed.Choose a Convenient Time
When is the best time to hold a performance appraisal discussion? There isn’t any one particular time that is ideal — mornings or afternoons, early or late in the week, it doesn’t matter.
What does matter is having enough time. Wise managers set a specific time for a performance review — perhaps 60 minutes — and announce at the beginning of the meeting just how long they have budgeted for the discussion. But they also make sure that the next activity scheduled for after the appraisal discussion is one that is either a low-priority (so that it can be re-scheduled) or highly flexible (like working on a long-range plan). It may turn out that more time is needed to discuss some sensitive items that arise during the discussion. It may also be that the performance appraisal discussion turns into a highly creative brain-storming session that needs to continue beyond the one-hour schedule. Make sure there’s enough time for unexpected events to play out. (more…)
Employee Performance Reviews — Dealing With Disagreements March 24, 2006
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What do you do when an employee disagrees with something you’ve written on their performance review? How can you prepare for this and deal with it effectively?Start by listening to figure out the source of the disagreement. Is it an issue of fact (you wrote that the employee received a customer satisfaction score of 79 but the employee says that his score was actually 83), or is a matter of judgment (you wrote that the employee’s customer service skills were unsatisfactory; she feels that her skills are terrific)? If the disagreement involves an issue of fact, get the facts and make any corrections necessary. If it’s a matter of judgment, ask the employee for additional evidence. Then determine whether that evidence is weighty enough to cause you to change your mind, revise your judgment, and amend the rating that you assigned on the employee’s performance review. (more…)
