Comparing Co-Workers Against Each Other: Does This Motivate Employees?

Comparing Co-Workers against Each Other:

Does this motivate Employees?

Jeff Holder

Florida Institute of Technology

Abstract

Forced ranking (FR) is a performance intervention, which can be defined as an evaluation method of forced distribution, where managers are required to distribute ratings for those being evaluated, into a pre-specified performance distribution ranking (Cooper & Argyris, 1998). The forced ranking method is utilized because the performance of each person can be referenced against another to compare their efforts and rewards.

Annual or semi-annual performance reviews are used by 1/3 of U. S. companies to evaluate employees against their colleagues. When Jack Welch was CEO of General Electric (GE) he instituted evaluations that required managers to divide their talent into 3 tiers; Top 20%, Middle 70% and the Bottom 10%. Yahoo on the other hand had a less demoralizing rating system which compared an employee’s performance to an absolute standard rather than to each other.

Both organizations were looking to retain the best and brightest employees but with comparative techniques at opposite ends of the evaluation spectrum.

“Forced Ranking” systems rankings require managers to take a hard look at performance. Because of discrimination lawsuits from employees that believed they were “ranked and yanked” based on age and not merely performance has fewer companies adopting the controversial management tool.  It hinders collaboration and risk-taking, by penalizing groups made up of stars, critic’s state.  Studies have concluded that the technique has limited scope because of diminishing returns.

With a list of “Best Practice” ideas, employee reviews can become a process based on performance.  Techniques suggested include Managers meeting more often with employees, making room for innovative risk, adjusting goals with grading changes, choosing action words as performance labels for value, and building trust through conversation and not just paper.

Forced rankings, as a stand-alone method of evaluation, are NOT a good comparative analysis technique for the long term. The analysis from Drake University found that its benefits were only beneficial for the first couple of years. After that, the gains drop off to zero by year 10.

In my opinion this is not the way to motivate employees. Herzberg´s job enrichment (Ivancevich et.al, p.120) would be more effective “by building personnel achievement, recognition, challenge, and responsibility and growth opportunities into a person´s job”.  The result can be an increase in motivation. Additionally, the dark side of a Force Ranking can be that employees are evaluated by irrelevant methods or points (subjective personality traits) instead of being evaluated by their job performance.