Question

Imagine you’re the VP of Human resources for a Fortunate 100 company. You’ve spent your entire career attempting to enhance the workplace for employees to support their productive work in the organization. While you understand that bottom-line decisions often dominate many of the matters you have to address. You have worked hard to ensure that the employees were treated with respect and dignity in all interactions that affected them. You aligned the hiring process to serve the strategic needs of the organization, as well as implemented an effective performance management system. You truly believe in the progress you’ve made in helping the organization achieve its goals. You simply couldn’t imagine doing things differently. However, concern that the performance management process is becoming less effective because managers are inflating employee ratings has led 15 percent of all large organizations to adjust their performance management to what is frequently called “rank and yank”. Under such a system, managers are evaluated as 1, 2, 3 or 4, with 1 being the highest rating and 4 the lowest. In many cases, managers are required to give a 4 rating to the lowest 10 percent of employees each year. Those individuals receiving a rating of 4 for two consecutive years are often let go from the organization.

The intent behind this system is that the throughout the two year process, evaluators are to meet frequently with the four employees, counsel them and provide necessary development opportunities. Employees in organizations that employ such a performance management system often view this process unbearable. They view the performance management process as punitive, one in which the organization is attempting to rid itself of higher-paid older workers. In at least one case, Ford Motor Company employees have filed a lawsuit to stop this practice­­­­­­­—and prevailed .Ford removed the punitive nature of its evaluation system—and focused it more on counselling and performance improvement of the lowest-rated employees rather than elimination from the organization.

Source: Textbook- DeCenzo, D. A., & Robbins, S. P. (2013). Human resource management

Questions

1. What type of evaluation process would you say is being used in this case? Explain this evaluation process.
2. What effect, if any, do you believe rank and yank evaluations have on managers? Do you see these effects as positive or negative? Defend your position.
3. What role does such a system have in distorting performance appraisals?
4. Write your suggestions/opinions to create better performance appraisal system in the Organization.

Answer 1

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What type of evaluation process would you say is being used in this case? Explain this evaluation process.

The assessment process is directed at more of a Forced Selection approach. The method of performance assessment calls for a more "force-fitted" approach to fit the performance evaluation ratings into a distribution of bell curves. To counter the inflation rate, another "rank and yank" strategy came into force that forced managers to assign the lowest 10 percent of workers a 4 ranking every year. The framework outlined by the company is more of an attempt to summarize the best, the bad and the low-performers. The system is really stable too.

What effect, if any, do you believe rank and yank evaluations have on managers? Do you see these effects as positive or negative? Defend your position.

I see the effect is really negative, so it's called punitive. The ranking will be a feed forward and contribute to solutions that will allow the strong strategy to resolve the challenges. The program does not place much focus on changing the situation for the better–it just sets down what will happen if there is a two-year ranking in a row.

What role does such a system have in distorting performance appraisals?

Employees tended to see this as punitive–and the performance appraisals were more an obstacle than an aid. This is a force-fit strategy that aims more at segregating workers into poor, average, and high-performing performers. The performance appraisal framework no longer remains a tool for feed forward. The "forced" method is also very restrictive and gives little leeway when it comes to various abilities or positions.

Write your suggestions/opinions to create better performance appraisal system in the Organization

Performance appraisals should definitely have a rating system – but should also include the following:

1. Open conversations throughout the year – continuous feedback loops
2. Transparent process – share as much information with employees as possible on the performance appraisal process
3. Make performance appraisal more objective – this helps reduce element of bias
4. Counselling for employees who receive a low rating
5. Invest in people – help them grow, learn, re-skill to match the organizational needs instead of just force-fitting into a 1 to 4 scale

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