Forced Ranking is one of the hot button issues in business. This controversial management system puts employees into tiers based on employee performance. This is usually done with the intention of increasing productivity, but it can also have its drawbacks. If you’re a manager looking to incorporate forced ranking into your office, you should strongly consider its strengths and weaknesses before making a decision. Here are some forced ranking pros and cons to help you decide.
Pro: Standard For The Work Place
Grading employees based on performance and putting them into specific tiers will set a standard for what you expect of them as a manager. By placing them in the middle to low tiers, you will be notifying the employee that they need to improve their performance. By placing them in the upper tiers, you will be encouraging the employee to keep their levels of productivity up. For a manager, this will open up a line of communication and make employees more aware of how they are doing.
Con: Demoralizes Under Performers
Placing employees into lower tiers may end up being a detriment to their morale that no amount of employee suggestions will improve. They may be led to believe that their efforts are getting them nowhere. This can result in performance stagnation, or worse, a decrease in productivity. Your management and communication skills will come into play here. These communication skills will determine whether your employees receive your rankings positively or negatively.
Pro: Forced Rankings Incentives
Your forced ranking system is like a quality management system for employees, as it can be tied in with bonus payouts or a risk of termination. These consequences can serve as powerful incentives. Higher-performing employees may feel that their extra effort is fruitless. However, with the promise of bonuses, they may be more inclined to stay consistently productive. Under-performers, on the other hand, will look to avoid termination and improve on their flaws. In both cases, managers will be increasing productivity across the board.
Con: Individuals Over Team
It is safe to say that companies function more efficiently when employees work as a team. Dividing people into categories, however, might give them a feeling of segregation. Feelings of contempt or jealousy may increase as a result of employee performance rankings. As a result, employees may be encouraged to compete with one another rather than work together. A lack of cooperation will result in lowered production. Managers should consider whether or not a ranking system would hurt team performance before implementing the system.
Pro: Accurate Reports
The reason many businesses choose a forced ranking system is because it encourages managers, supervisors and HR professionals to differentiate employee skills and talents. Often times, there is a personal relationship between manager and employee that can affect accurate performance reporting. Traditional performance appraisal systems allow room for rating inflation and false performance reporting. With a forced ranking system, all distribution requirements will be met, and executives and business owners are provided accurate information regarding employee performance.
Employee morale can be seriously damaged in organization’s with forced ranking programs in place. This is important to note, particularly for those businesses who are already experiencing issues with employee satisfaction and office morale. Even for those businesses that do not have problems with employee morale, a forced ranking system can cause them. If you are worried about damaging office morale, consider alternative strategies to promote team building to help counteract these negative effects.
Forced ranking systems were designed with the intent of raising performance in the work place in the Hong Kong business market and corporate America alike. However, their effects can vary widely depending on how they are implemented. Managers should take their time to gain an understanding of their employees. Considering these pros and cons, you will be able to determine whether or not a forced ranking system will benefit your office.
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