Performance appraisal is considered as one of the most important and most frequently used practices of human resource in organizations. Performance appraisal encircles identification of strength and weaknesses of individuals, goals and objectives setting, as well as recognition of employees training needs (Caruso, 2013). Characteristically, the evaluations are instrumental in supporting other human resource activities such as pay, rewards and promotion management. They are typified by the comparison of an employee’s performance to a pre-defined standard, other employees in the organization or previous performance.
Forced Ranking Appraisal System Defined
Forced ranking is a performance intervention system that is considered as an evaluation method of forced distribution where management is required to distribute ratings for the evaluate employees, into specified distribution ranking. The Forced ranking system is subject to the principle that an organization needs to has to categorize its best and worst employees and reward the top performers ones with pay rises, training and development opportunities as well as bonuses, while encouraging the worst performers to leave (Davis & Rogers, 2005). Less effective and incompetent workers can be swapped with new and more proficient employees who will improve the general performance of the employees (Hazels & Sasse, 2008).
The 20-70-10 Rule
Managers distribute workers into three major categories:
- Top 20 percent are the ‘A’ players- individuals who will lead the future of the company. Individual in this rank are accorded promotions, raises, training and stock options.
- The middle 70 percent are referred as the ‘B’ players. This group possess steady-eddies and are awarded with smaller raises while encouraged to demonstrate improvement.
- The bottom 10 percent as the ‘C’ players made up by a group of employees with the least contribution. Workers in this rank are offered no raises or bonuses and are offered training or fired.
FRS Development and Implementation
The success of a forced ranking system is subject to the quality of execution. There is need to determine what criteria will be employed for the ranking process. Other factors to consider in implementing the FRS include; the frequency of using the procedure, identifying who to perform the ranking, what information needs to be availed to rankers, communication about the ranking system, how the results will be used, and availability of appeal process (Davis & Rogers, 2005).
Read also Performance Appraisal Systems
The critical components of the FRS implementation process are:
- Proper training of individuals who will act as rankers
- Successful running of the ranking procedures proficiently
Pros of Forced Ranking Appraisal System
- The FRS distribution is a trouble-free as well as consistent methodology where all managers appreciate and understand the standards
- The workers are visibly divided into different categories enabling the human resource to target training activities, development programs and manage reward and salary review process, lay-offs and terminations. It provides a defensible and sound rationale for all human resource actions.
- Forced ranking do not encourage artificially inflated appraisal ratings and managers are called to act on low performing individuals
- The low performing individuals are provided with personal plans to inflate their performance in a bid to meet performance standards (Aune & Roed, 2011)
Cons of Forced Ranking Appraisal System
- The forced ranking method may lead to culture shock leading to generation of a working environment where competition discourages teamwork and there is sub optimizing of corporate goals.
- Some employees may become dispirited and this may lead to some employees and managers resisting the appraisal process.
- The forced ranking is ultimately not a sustainable process since it is impractical to keep raising the bar indefinitely
- There is the risk of quotas pushing the excellent employees down in the event that the managers act to meet the distribution curve
- Forced ranking is reported to inhibit creativity as well as risk taking thus weakening and negatively impacting the corporate culture
Technology as Forced Ranking Enabler
Technology is instrumental in the performance management systems and it useful in engaging employees more to trust the appraisal process. Besides automation of process, technology aids in generating better management information on performance by division, grade, and gender among others. It has allowed easier management of remote employees (Chubb et al., 2011). In Forced ranking, software and computer programs are designed to provide a system for collecting as well as processing data that helps in regular and timely performance measurement.
Use of software is a helpful enabler of enhanced impact performance management. Software are crucial as a performance calibration process assisting managers in delivering performance measurements that are precise which subsequently ensures fair allocation of rewards besides aiding the organization to retain high performers (Abraham et al., 2013).
Use of technology in forced ranking enhances the accuracy of performance ratings that is presented by managers. Lack of technology use may lead to poor calibration which in turn may result in legal actions as well as demoralizing and driving away high performers who do not get the reward and recognition associated with their performance review (Abraham et al., 2013).
Additionally, use of technology supports a collective discussion as pertains to the performance. For instance, Performance Multiplier, which is a Facebook-style program developed by Accenture, allows employees to post updates as well as personal weekly growth. Such peer-to-peer discussion enhances transparency subsequently bringing attention to managers and rankers who tend to rate harshly or leniently (Chubb et al., 2011).
Forced ranking as a performance measurement technique involves the assigning of pre-determined percentages of employees in an organization to each class of performance rating. Forced ranking is considered as one of the most controversial techniques in modern performance management systems. This follows, especially, when organizations make use of the bottom performance rank to determine the individuals that will be laid off or dismissed. It is important to note that while most organizations record high levels of productivity in the organization attributable to forced ranking system, others have cited it as a main contributor to a collapse in industry leaders. There have been several lawsuits that have attacked forced ranking as a way used to cover some form of illegal discrimination. However, the employment of technology can be instrumental in remedying most of the risks involved in forced ranking as well as enhancing transparency.