The debate rages on in performance management circles about the concept of forced ranking – is it a beneficial exercise to rank all employees in a department (or the entire organization) in terms of their overall “worth” to the organization? I’m going to say yes, but with some caveats and reservations.
Let’s first look at two sides of the argument – starting with the benefits of ranking. Ranking requires management to a) discuss all employees being ranked, b) be aware of their overall performance and abilities, and c) to make choices. This information is crucial to know whom to offer development opportunities, whom to include in succession planning, and whom to look more closely at. This ranking can be extremely helpful in planning a reduction-in-force or reorganization.
On the flip side – raking is hard work. It requires a sound and well implemented performance appraisal process. Fundamentally managers must be honest – with themselves, the employees and their bosses. The ranking also will have a subjective component. It can be hard to determine the relative value of an engineer versus a sales person – both of whom can significantly impact the company but in distinctly different ways. Ranking will involve a considerable amount of discussions about difficult subjects and organizations with low trust levels or the inability to deal with conflict will not be able to rank successfully.
One thing that ranking does provide is a reality check. In a report released by the GAO concerning the Veteran’s Administration, one problem with not raking becomes evident. Among other things the report looks at the 2007 performance ratings given to VA employees in four district offices. In those offices, 68-81% of employees were rated “Fully Successful”, 2-10% were rated “Excellent” and 9-28% were rated “Outstanding”. In none of these offices were any employees rated “Minimally Satisfactory” or “Unsatisfactory”. I don’t mean to cast dispersions on VA employees, but in any population of that size if the appraisal system is working correctly a more normal-distribution of performance rating should be evident. There should be about as many people not meeting expectations as there are walking on water. In all fairness to the VA and the GAO, they recognize the same thing in this report.
I do not support those organizations that annually rank all employees and then automatically fire the bottom 10% to make room for new hires. I have yet to see a performance appraisal system that is reliable enough to make those decisions. Clearly, those employees who fall to the bottom of the ranking need a close look as to their future with the organization, but to directly tie termination to a subjective ranking is ill-advised.
Not surprisingly, the Intranet has spawned a new method of ranking your employees. The website cubeduel.com lets individuals choose which of two coworkers they’d rather work with on a head-to-head basis. If enough employees rate enough of their peers, the website provides the rankings and scores of who’s the best, and who’s not. While I can see the visceral entertainment value, I can’t really see anything good coming out of this process – but then there are a lot of things on the Intranet that I really just don’t get.
If you are an owner or manager in a small business, I strongly encourage you to a) have a solid and consistent performance appraisal process in place and then b) spend some time each year ranking your employees. Don’t do anything rash with what you learn, but I think you’ll find the process will be extremely enlightening and will inform many other decisions about what you need to do to grow your organization.
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