Posts Tagged ‘performance management’

Forced Rankings Suck

Wednesday, April 28th, 2010

The first time I heard about the use of forced rankings, and the subsequent letting go of the lowest performers, something just didn’t sit right with me. And while this management approach was made more popular in recent years by Jack Welch when he was at GE, it was long before then that I first learned of it. In fact, I first learned of its use by Jim Pattison, one of the most successful businessmen in Canada. He had used forced rankings with his car salesmen in the early years of building his car dealer network.

Just in case you missed out on the basics of the forced rankings management approach, it works like this. Each manager, on an annual basis, is to rank all of his or her employees from the best performers to the worst. Then, the bottom 10 percent (or some set number) of employees are let go for not performing well enough. The idea is that with each year, the overall performance will improve as only the best survive.

Here’s my take on the use of forced ranking: It’s the worst method of improving performance in the workplace ever invented. In fact, it’s just plain stupid.

Why? Let me count the ways:

  1. It doesn’t improve the long-term performance of employees. In fact, it’s more likely to de-motivate employees and cause them to perform worse. Fear is not a long-term motivator.
  2. It assumes the bottom 10 percent, or 1 percent, or 20 percent, or whatever the cut-off point is are not performing. Is it not possible that all employees are performing at a high level?
  3. What if most of the employees are not performing? If that was the case, why only deal with the ones below the cut-off point, leaving the other non-performers thinking they’re doing okay?
  4. It assumes that the performance problem is the employees’ problem. What if it’s the manager’s fault, or a systems problem, or a lack of resources?
  5. The focus is on the people, and not the performance. When management focuses on people, and not on the performance of the employees, it can make the performance even worse.
  6. It does not tell you why the bottom performers are not performing. The focus is on the problem, and not the solution.
  7. It is usually tied to the employees receiving feedback only at the time of being told. In most cases, the first time an employee learns how he or she is doing is during the annual review period. At that time, the feedback is either “you survived” or “you’re cut.” Rarely is there feedback along the way for the employee to learn how he or she can survive.

Sure, Jack Welch is a brilliant executive. And sure, he made GE perform exceptionally well (certainly from a financial markets perspective). But there is always the exception to the rule, and no one is perfect. I wonder what the long-term impact of using forced rankings will be on GE. I wonder how well GE would perform had he not instituted forced ranking. (I’ve read of managers at GE who fudged the system to avoid being forced to let go good performers)

Forced ranking doesn’t work in the long-term. It’s a lazy way of managing performance. Don’t use it. It sucks.

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Performance Management is NOT Conducting a Performance Review!

Friday, September 11th, 2009

Aarrrgghhh! I’m frustrated! I hate it when I hear someone say their company has a performance management plan, when all they have is a process of conducting annual – or even bi-annual – performance reviews.

This is no different than saying that you have a marketing plan when all you’ve done is run one ad in the newspaper. Sure, that ad may be a part of the marketing, but it’s not a marketing plan or marketing strategy. And sure, performance reviews may be a part of a performance management plan, but it’s NOT the entire thing.

So, what is performance management? It’s a strategy to enhance the overall performance of all personnel in the organization. Things that would typically be a part of a performance management plan are:

  • Goal setting – both individually and for teams.
  • Regular feedback systems.
  • Measurements.
  • Coaching and mentoring.
  • Reviews.
  • Workplace evaluation (improving the work are to allow and promote better performance).
  • Alignment of organizational values and culture with the individual.
  • Alignment of organizational mission and strategy with individual and group goals.
  • Communication systems.
  • Compensation.
  • Rewards and recognition.
  • Succession planning.

While this list is incomplete, it begins to demonstrate how vast performance management really is. One way of looking at performance management is this: whatever it takes to help individuals and groups within the organization to perform better. That could be moving someone from one role into another to leverage his or her strengths. It could be providing additional skills training. It could be defining specific metrics that an individual can measure themselves against on a regular basis. And it could be as simple as connecting with an individual on a personal basis, letting them know that they are appreciated for more than just being a “tool” the company uses to accomplish a task.

Ultimately, you can think of performance management as your performance strategy. If your organization has a strategic plan, a marketing strategy, a product development strategy, or a financial strategy, then doesn’t it make sense that it should have a performance strategy. Because, as Peter Drucker once alluded to, business is just a group of people trying to accomplish a common goal. Without a strategy to do that, you’re relying on hope and wishful thinking to reach your goal.