Performance Review and Forced Rankings
September 13, 2006 by Mary Wynne-Wynter
I see both sides here and don't see any easy answers. I think how a company does performance review will become part of its culture and values.
Under New Management: Performance Reviews: Many Need Improvement: "Only 3 in 10 employees believe their companies’ performance review system actually improved performance."
Some companies have tried to fix such problems by instituting forced performance rankings, also known as forced distribution or, less subtly, as rank-and-yank. Under this system, made famous by John F. Welch Jr. during his tenure at General Electric, managers sort fixed percentages of their employees into categories like “superior” or “needing improvement”; those in the top group typically receive the best compensation, training and promotions while those at the bottom may be denied raises or promotions, or even fired. The idea is that all employees understand where they rank, managers face up to personnel problems in their groups and the best employees are motivated to continue to excel.
Some skeptics question whether those companies that eliminate forced rankings can make reviews more effective. They challenge the basic concept of performance reviews by managers.
MARY JENKINS, a co-author of “Abolishing Performance Appraisals: Why They Backfire and What to Do Instead” (Berrett-Koehler, 2000) advocates a system in which employees themselves seek feedback from people they work with or who have skills they seek, then review a self-designed growth plan with their supervisor. She is using this approach at Genesys Health System in Michigan, where she is vice president for organizational learning and development.
But performance reviews are unlikely to disappear. Many companies believe that a paper trail of reviews can protect them against lawsuits from former employees, and many consultants and human resources executives contend that well-designed reviews, along with frequent conversations about performance, can truly help employees improve and develop.
It is instructive to note that critics of performance reviews have been around for a very, very long time. When the Wei dynasty in China rated the performance of its household members in the third century A.D., the philosopher Sin Yu noted that “an imperial rater of nine grades seldom rates men according to their merits, but always according to his likes and dislikes.” >
(Via NYT > Your Money.)