I’ve never worked in an organisation where a ranking performance method was used as the prime driving vehicle for determining stuff bonuses or remuneration. And just to make sure we have a common understanding (or – in consultant speak – we’re all on the same page), the ranking method is about ranking employees for determining (primarily) employee promotion or allocation of bonuses and pay.
Having said that I can still recall my bewilderment reading about the Stack Ranking method used by Microsoft during the reign of Steve Ballmer. As outlined in VanityFair, “The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.” And, as recalled by a former Microsoft software developer, “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review…It leads to employees focusing on competing with each other rather than competing with other companies”.
Now back to Bacal’s article. He pulls not punches in stating his point that not only “most performance appraisal systems fail to add value to organizations” but also “Ranking employees, particularly for determining promotion, and pay, or even for providing developmental feedback simply makes no sense“. He goes on to analyse the the main perceived benefits from using this method, followed by a critical analysis of these benefits and demonstrating that the disadvantages any such perceived benefits.
The article does not suggest what system should be used instead but given that it seems this is part of a series of articles the answer might be still in the pipeline.
I chose to bring up this topic because I believe most organizations (at least the ones I’ve known directly during my working life time) are finding it difficult to adopt a performance method that will be both fair and productive. The obvious way of attending to this issue is by using a method that takes into account both the employee’s performance in the context of his/her job requirements and the employee’s behaviour and attitudes. Employee that excel in one dimension but lack in the other would be rated lower than those excelling in both but higher than those excelling in none.
Think about it!