Performance Appraisals: Forced Ranking
What is Performance Ranking?
Simply put, it is just ranking (comparing) the performance of each individuals in a group of employees.There are many ways of ranking staff.
Types of Appraisal Errors
Whenever we make an assessment of someone, not necessarily making an performance appraisal, we subject ourselves to different errors in making that appraisal.
- Central Tendency
- Contrast Effect
- Escalation of Commitment
- Self-fulfilling Prophecy
- Glass Ceiling Effect
Why Do We Need to Impose Forced Ranking?
Often managers are lenient in their scoring because of 3 possible reasons:
- They rate staff as meeting job expectations but staff refuses to sign the appraisal form.
- As a practice, a majority of the staff have been rated a 4 because historically the salary increment for a 3 rating is low; probably not enough to combat inflation.
- Manager’s bias or discrimination
What is the Normal Distribution of Work Performance (A Bell Curve)?
Here is how a Bell Curve Look Like.
Source: Compensation Café website
Many things closely follow a Normal Distribution. This includes whether:
- You measure and compare heights of people
- You measure blood pressure
- You measure marks on a test
- Errors made in measurements
This is also true with work performance. The following are bell curves of grades and IQ test results.
Source: Blog Bell Curve website
Source: Vivifychangecatalyst website
It is important that communication should made to employees so that they understand that if they receive a performance rating of 3, it does not mean that they are average performers.
Almost everyone likes to think that they are the best performers and they should receive attractive salary increments.
First, use a 5 level rating scale so that you can tie it back to a bell curve. Second, choose the descriptors and descriptions carefully.
The Performance Management Cycle
Assuming that your workplace adopted the traditional performance cycle, the appraiser would have 1 year to observe and get to know the work performance of the staff.
Source: Kervin and Barnes website
Here is another way to represent this cycle.
Mapping the Bell Curve – Rank Right First Time
Given that the appraiser has ample time to assess the performance of the staff, he or she would be able to do an initial ranking of the staff before conducting the face to face appraisal. This will give him the opportunity rank the staff according to a normal distribution.
Skewed Bell Curve
The most often skewed bell curve is the positive skewed bell curve. It means that the majority of the staff are rated a 4 for their work performance.
Source: Asset Insights website
Forced ranking happens when the moderator lower or raised the performance rating given by the appraiser and accepted by the appraiser as the bell curve is skewed.
If the Head of Department did not do a preliminary ranking, there is a strong likelihood that the bell curve for the overall performance scores will be skewed. This will be discovered towards the completion of the performance appraisal exercise rather than at the end.
The forced ranking will probably be carried out in the moderation stage. This adds to the effort and time required for the moderation. For staff that has been given a worse rating by force, they will become disappointed, discouraged and feared for their jobs.
One Approach for Forced Ranking
Break employees with ratings of 4 and ratings of 5 into 2 different groups. Now ask the managers to do a simple ranking for each group separately.
For example, out of a 40 staff, 5 staff was given a rating of 5. Get the manager to rank the 5 staff in terms of best to worst.
For example out of the same 40 staff, 20 staff was given a rating of 4. Get the manager to rank the 20 staff in terms of best to worst.
Is the Company Paying Staff Too Low?
If the Head of Department or staff provides feedback that the salary increment for rating 3 is too low and they are complaining that they should be rated 4; but the Head of Department has still managed to rank everyone accordingly to a normal distribution, then it could be that this is a one off difficult attempt by the Head of Department.
Such situation will happen in industries where two-thirds of the total staff population are rank and file workers and these are likely to be semi-skilled, low skilled or manual workers where the salary is really low. It happens with non for profit organizations or commercial organizations that have low net profits. It becomes critical to look into this problem.
The negative consequences if this problem is not address is that staff will leave their jobs. The impacts of this:
- There will be discontinuity in business processes.
- There will be business disruptions as it takes time to recruit new staff.
- Recruitment is a cost.
- The business may not have a chance to reap the return from training investments.
- New staff needs to go through a learning phase before they become effective.
Manpower Planning in An Industrial Firm
The Normal Distribution Curve and Its Application
Employee Survey Benchmarks: Understanding T-Scores
The Bell Curve
How to Curve Grades
The Bell Curve and Standardized Test Scores
Understanding PSLE T-Scores
General Performance Evaluation
Performance Appraisal Form
Performance Appraisal Form – Performance Point Method
Performance Appraisal Form – Entry Journeyman Expert
Performance AAppraisal Form – With Character Assessment
Performance Appraisal Form – With Scoring
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