The Effect of Forced Ranking on Performance and Motivation

The Effect of Forced Ranking on Performance and Motivation

Learning Team 1

Amanda Hewes

Randolph Hill

Melissa Johnson

Kisha Jolly

Webster University

The Effect of Forced Ranking on Performance and Motivation

Forced ranking performance appraisals are a manager's evaluation method that requires them to distribute ratings amongst their employees. This technique is very successful in some organizations while others find it hinders teamwork and lowers moral. This paper will discuss the effects of forced ranking performance appraisals on employees. It will also explain why some employees have negative reactions to forced ranking and techniques that can be used in place of forced ranking to motivate employees.

Benefits

Forced ranking is beneficial because it weeds out low performers while keeping quality performers. "It can be argued this approach is dictated to force managers to make the performance evaluation process truly reflect how each team member is performing, relative to others, with the ultimate goal being more productive employees, who perform at levels to make service, revenue, and growth goals attainable" (Donaldson, 2004). Though the process may be fierce, there are as many as one-third of business organizations in the U.S. who use some type of evaluation system that pit them against their fellow colleagues (McGregor, 2006).

Force ranking relates to Adam's equity theory because when an employee feels treated fairly, they are more likely to be motivated which the top are ranking performers. Those who feel unfairly treated are prone to feelings of disaffection and demotivation which can sometimes directly relate to substandard performance. The expectancy theory is as an explanation of why individuals choose one behavioral option over another in an effort to achieve the end they value. Valency measures how much an employee wants the consequences of completing the task. Valence is positive if a completed task leads to an outcome desired by the individual which can be promotions, praise, or pay raises. Employees will put in more effort if they believe that performing well; will lead to a desired outcome of being ranked above their peers.

Production levels may rise, if manager's actively communicate with employee's their standards and expectations. Sometimes manager's fear communicating with their subordinates because they know they have not properly explained standards and expectations to them which results in substandard production. Lack of communication is sometimes the reason behind substandard performance. "The intent of implementing a forced ranking performance intervention is in fact admirable: to improve the organization's performance, to fairly reward top performers, and to help improve contributions of low performers - or, to remove them as the "dead wood," which drags down higher performers" (Donaldson, 2004).

Drawbacks

Today's workforce has higher expectations of their organizations than in the past. Elliot Larson said it best: "Anger always comes from frustrated expectations." (Larson) Therefore, there are certain expectations a person has of an organization starting with Maslow's Need Hierarchy, as related to jobs, of Physiological, the lowest of needs, and would extend over the term of the relationship to Self-Actualization, the highest of needs. As long as the person continues to progress (input) the expectation is they will grow with the company and be rewarded (outcome) accordingly. Forced ranking goes contrary to a person's expectations of an organization. Peter Bergman says: "Ultimately ranking, and all the more so when it's forced into a predefined distribution system, misses the basic and very human principle of talent management: each person has an individual set of skills, competencies, motivations, passions, capabilities, strengths, and weaknesses (Bergman, 2010). This is what a person understands and inputs to an organization and this is what force ranking takes away from the bottom 10%.

Peter Bergman suggests that negative reaction caused