Suppose you are an employee who exceeds every goal set for you, and you work on a team where most people seem not to try very hard and often fall short. Would a forced-ranking system seem to you like a fair way to measure and reward performance? Why or why not?
Answers
Answer:Today’s business environment and the shortcomings of existing processes are prompting companies to rethink performance management. Now more than ever, it is critical to identify the top performers and distinguish them from the underperformers. Hence, many are revisiting an old tool: forced ranking.
Forced-ranking systems, established years ago at companies such as GE, are increasingly being reassessed. In a nutshell, these systems typically either align people in preset “buckets” (such as the top 20 percent, the middle 70 percent, and the low-performing 10 percent — the system used at GE) or rank them by performance from best to worst.
Below, we’ll address how organizations currently use forced rankings, consider how such rankings complement existing ways to manage performance, and identify which organizations, functions, and cultures find them most appropriate.
How effective is performance management?
One could argue that some form of performance appraisal has been in existence since the time of the Roman Empire. But it wasn’t until after World War II that formal approaches began to appear. Finally, in the 1980s, performance appraisal became performance management, and the process started to become more than just a once-a-year event and began to involve feedback, goal-setting, and self-reviews.
But does performance management work? Numerous industry surveys suggest that indeed it does not. In a recent Andersen survey, less than 5 percent of managers and employees alike were very satisfied with the process in place at their companies. Here are some reasons for the dissatisfaction:
Managers have no training.
Managers want to be liked.
Setting goals is tough and imprecise.
There are few consequences for notconducting performance reviews.