Would you recommend that an employer use a forced distribution approach to performance appraisals?
I would recommend a forced distribution list to organizations that are large in size and are looking to create a process oriented approach. About 20% of Fortune 1,000 companies and growing are using this approach. “Some say forced ranking is not only the best method, but an essential practice to turn a struggling company into a market-dominating one.” (Bates, 2003) This approach is the best way to identify your high performing individuals and also the bottom performs who should be helped out. The high performers should be given promotions, financial incentives and training to grow within the company.
A leadership development program can also be started after identifying the high performers. The low performers should be put on a performance improvement plan to get help. Low performers are not automatically fired for being in one bracket – warnings should always be given first. It should be looked at as a development tool. Forced ranking engages the manager to provide assessments of employees and forces them to communicate the tough stuff with their employees. It holds the managers accountable for their workforce. “The great value of using a forced ranking process doesn’t result merely from plunking people into different buckets,” he says. “The payoff comes from the action that is taken with each person following the assessment sessions.” (Bates, 2003)
What are the Pro’s and Con’s?
Creates and sustains a high-performance culture. Employees know where they stand at all times and if they are not performing well they can be given the opportunity for improvement using a performance appraisal system. For the high performing employees they are rewarded and motivated to continue performing. “Lets employees know where they stand. One of the common complaints from employees is about the lack of feedback on their performance. Forced ranking sends a clear message as to how people stand, or fall” (Sprenkle, 2002). The systems forces managers to have tough conversations with direct reports they may have been avoided. There is a more disciplined approach to the management process. Managers cannot ignore performance issues with this approach. Can easily match employee performance to compensation and year-end bonus. Can motivate employees to increase their performance if they know that their compensation depends on this. (Lipman, 2012) Cons:
Employees are going to want feedback more regularly to make sure they are performing well. “Some companies really do have a lot of high performers, so forced ranking eliminates great people and damages the culture.” (Bersin, May) If an employee is surprised by their rating they will most likely be demotivated. “A study by Drake University professor Steve Scullen, shows that forced ranking loses its effectiveness after a couple of years, since the average quality of workers increases and there are fewer “C” players to identify.” (Alsever, 2008)Can create a competitive environment that does not encourage team work. More likely to have discrimination lawsuits
Alsever, J. (2008, May 1). CBS Money Watch. Retrieved from What Is Forced Ranking?: http://www.cbsnews.com/news/what-is-forced-ranking/ Bates, S. (2003, June 1). SHRM. Retrieved from HR Magazine: Forced Rankling : http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0603bates.aspx Bersin, J. (May, 6 2013). Forbes. Retrieved from Time to Scrap Performance Appraisals?: http://www.forbes.com/sites/joshbersin/2013/05/06/time-to-scrap-performance-appraisals/ Lipman, V. (2012, July 19). Forbes. Retrieved from The Pros And Cons Of Forced Rankings: A Manager’s Perspective: http://www.forbes.com/sites/victorlipman/2012/07/19/the-pros-and-cons-of-forced-rankings-a-managers-perspective/ Sprenkle, L. (2002, June 20). Workforce. Retrieved from Forced Ranking – A Good Thing for Business?: http://www.workforce.com/articles/forced-ranking-a-good-thing-for-business