The contemporary dynamic and complex business environment has compelled most organizations to rethink on their performance management systems (Halogensoftware, 2015). Most companies such as IBM, General Electric, Yahoo, Motorola, AIG and a conglomerate of other corporations around the world, have adopted the controversial forced ranking systems abbreviated as FRS (Bashir, Salman & Rohra, 2011). In a nutshell, this controversial performance management tool,
enables the organization to segregate the employees into three categories, based on their performance. The top 20 percent of the whole workforce of a firm is the most productive and can be referred to as the “A tier” (Bashir, Salman & Rohra, 2011). The next 70 percent of the workforce is in the middle and works adequately. This group is referred to as “B tier” and is vital for an ideal company (Bashir, Salman & Rohra, 2011). The last category is the non-producers or the “C tier” that proponents of FRS believe should be fired (Bashir, Salman & Rohra, 2011). The categories can extend up to five with sub-categories in terms of the levels of performance (Bashir, Salman & Rohra, 2011). This paper explores the pros and cons of FRS based on Siebel’s model and answers two more questions that revolve around the FRS used in Siebel.
Question one: Pros and Con of Forced Ranking System
The advocates of the FRs or bell curve have brought forth some suggestions or strong opinions that favour the system’s application within firms. There are therefore a handful of advantages of FRS (Bashir, Salman & Rohra, 2011). First off, it fosters and sustains a high performance culture within an organization. The employees are able to work hard to avoid being ranked below the ladder and consequently being fired (Bohlander & Snell, 2010). The method therefore keeps the workers on their toes to work as should in the attainment of set objectives. In this way the model automatically manages involuntary turnover through the elimination of weak performers and retention of the best performers (Bohlander & Snell, 2010). Secondly, the system of evaluation increases productivity of each employee and thus the organization at large (Halogensoftware, 2015). Studies have correlated strong performance management systems with the shareholder returns (Halogensoftware, 2015). Additionally, the performance of the managers also increases, encouraging them to communicate the business goals and objectives to be met.
Thirdly, the method allows for the identification of the key performers in an organization (Halogensoftware, 2015). In this way it is a fair way of evaluating the employees so as to be able to make decisions that relate professional development and succession planning. It is also an avenue to instil the performance management systems in a corporate environment. FRS aids in the elimination of bias or leniency error as well as other types of errors that the managers engage in during the process of evaluating the employees (Halogensoftware, 2015). In this way, the employees’ resistance is curbed since there is some form of transparency (Halogensoftware, 2015). As such, the method provides a fair ground for performance based rating. Last but not least, the method encourages competition within an organization. The employees are able to compete within themselves in order to get the best results and be awarded.
There are also demerits of FRS. First off, the method is demoralizing to the employees. This in itself is detrimental to the performance of the employees and the productivity of the employees (Nisen, 2013). Secondly, the emphasis on individual rather than team performance automatically crumbles the chances of the employees working as a team (Halogensoftware, 2015). When teamwork is absent in an organization, the organizational objectives are not met in time and to the worst case scenario, fail to be met (Nisen, 2013). This is because each of the employees will be more inclined towards completing their own assignments rather than working as a team (Halogensoftware, 2015). The method can also lead to competition that can get out of control. This has an effect in the organization as there will be more conflicts at the work place.
The method also discourages promotion in that when an employee changes their job position, through job rotation, they are highly likely to be ranked lower than they previously were (Nisen, 2013). This can cause high levels of job dissatisfaction that can automatically lead to failure of organizations. Authentically, the method is also unrealistic given that most of the employees have pressure and might end up having stress (Halogensoftware, 2015). The cost of employee turnover is also expensive in the long run (Nisen, 2013). The organizations using FRS also abandon employee growth and development but instead focus on the top employees rather than the middle and bottom (Halogensoftware, 2015). FRS attracts legal challenges that are difficult to defend due to the quota systems that is used.
Question Two: Darlington’s Claim on some Employees Leaving Siebel if the Bottom 5% are not eliminated
The problem brought forth by the implementation of forced rating system is that it gets as a corporate or organizational culture in the end (Grote, 2005). The performing employees strive hard to be above the threshold, below which they are rated low and thus marked for either development or firing (Bohlander & Snell, 2010). When the practice becomes the trend for some years, the top employees and managers might end up leaving for some reasons (Bohlander & Snell, 2010). First, the standards set for ranking could be so high making the employees to be below (Bohlander & Snell, 2010). This comes in when the companies using this stacking system of rating, decide not to recruit for some time because those at the bottom still hold places. Secondly, when the rating criteria or parameters are skewed, some of the top performers could be lost automatically as a result of demoralization. Thirdly, the top performing employees will be more exposed to development programs that make them build their career lives. In this case, the employees might leave voluntarily to other organizations that promise better packages and have good ranking systems compared to their companies that engage the stacking system of ranking. The other factor that could lead to the top employees leaving is the pride they get. Some of the employees ranked on top may have some superior view on themselves and thus create conditions unfit for the others in the same level making them opt for quitting as the best alternative.
Question Three
The advantages and disadvantages of the forced ranking system have clearly been seen above. Being in the shoe of the CEO of Siebel Company, it would be very detrimental to use the method in performance management. First the method might lead to high levels of competition that might be so unhealthy for the organization (Grote, 2005). Secondly, the reality of the rating method is questionable as some employees will be pitted against their peers while altering their ratings so as to distribute the scores (Bohlander & Snell, 2010). This in the eyes of the employees might seem as a discrimination method attracting lawsuits that might lead to loosing funds and poor reputation (Creelman, 2013). Thirdly, the top employees, no matter how well they are treated, if good retention methods are not used, they might end up being poached into other organization. This would be a loss since most of investments have been made in their development programs and other packs as well (Bohlander & Snell, 2010). Last but not least the method discourages coaching, coordination and team building as well as makes it hard to share organizational knowledge (Creelman, 2013).
Conclusion
Forced ranking system has the advantages and disadvantages that have been shown above. The overview of how the system works has also been given in this paper. As can be seen further, the top employees might voluntarily leave if the bottom employees are retained in the organization and developed for fear of competition and other factors as have been explained. Lastly, as the CEO of Siebel it would be prudent to ditch the system and get the best alternative in performance management to avoid all the shortfalls identified.
Bibliography
Bashir, U., Salman, M. and Rohra, C. L. (2011). An Investigation of the Forced Ranking System (FRS). Australian Journal of Basic and Applied Sciences, 5(6), pp.1581-1593.
Bohlander, G. and Snell, S. (2010). Managing human resources. Mason, OH: Thomson/South- Western.
Creelman, D. (2013). Forced Ranking at Microsoft: When HR Programs Cause Company Woes. [online] Halogen Software Talent Management Blog. Available at: http://www.halogensoftware.com/blog/forced-ranking-at-microsoft-when-hr-programs- cause-company-woes [Accessed 8 Sep. 2015].
Grote, R. (2005). Forced ranking. Boston, Mass.: Harvard Business School Press.
Halogensoftware, (2015). The benefits and challenges of profiling or stack ranking employee performance | Halogen Software. [online] Halogensoftware.com. Available at: http://www.halogensoftware.com/learn/how-to/the-benefits-and-challenges-of-profiling- or-stack-ranking-employee-performance [Accessed 8 Sep. 2015].
Nisen, M. (2013). Why Stack Ranking Is A Terrible Way To Motivate Employees. [online] Business Insider. Available at: http://www.businessinsider.com/stack-ranking- employees-is-a-bad-idea-2013-11 [Accessed 8 Sep. 2015].
Olson, E. (2013). Microsoft, GE, and the futility of ranking employees. [online] Fortune. Available at: http://fortune.com/2013/11/18/microsoft-ge-and-the-futility-of-ranking- employees/ [Accessed 8 Sep. 2015].
No comments:
Post a Comment