The Annual Performance Review Process: Let the Games Begin!
Maurizio Morselli, Member
About the annual performance review games people play and the perils of the Gaussuan Curve.
It’s the end of January! How did you perform in the recent games?
Most organizations by now have concluded their annual evaluation cycle, after HR’s numerous nagging reminders to the various business heads in a recurring attempt to achieve 100% completion rate by the pre-set due dates; after numerous acrobatics and follow ups, diligent HR colleagues have logged in all appraisals, produced numerous rankings and distribution reports and finally after a lot of prodding and nagging, managers were finally given the go ahead to begin conducting their one on one reviews with their direct reports before year end. The approach to performance reviews, the target distribution goals and related strictness may vary but in my experience, most are a variations of the above.
Furthermore, I believe that a single approach to the annual performance review process does not exist. The cornucopia of annual evaluation methods contains mostly hybrids/combinations of different annual performance evaluation models. As a result you will see organizations using graphic rating scales along with forced ranking; you will see organizations using Management by Objectives along with “Forced ranking”; there could be multiple combinations as well. However what one quickly realizes is that by default all of the mechanisms either are or resemble some form of “Forced Ranking”: Although the term “forced”, for me, just doesn’t conjure up happy images of collaborative, balanced environments, I admit it is an apt description.
Let’s look at a definition of “Forced ranking”? Meisler* defines forced ranking as” a work-force management tool, based on the premise that in order to develop and thrive, a corporation must identify its best and worst performers, then nurture the former and rehabilitate and/or discard the latter. It’s an elixir that in these slow-growth times has proved irresistible to scores of desperate corporate chieftains – but indigestible to a good many employees” (2003, para 2)
Forced ranking became a popular and clean method during Jack Welch’s era in GE. Over the period of time, it has been adopted globally by many organizations.
Forced ranking goes hand in hand with the ever popular bell curve (an example below) or as my erudite colleagues in Europe like to call it; the Gaussian curve (it’s still a bell curve, carissimi colleghi!). Here’s how it works: for simplicity’s sake let’s assume there’s an organization with 100 employees (though an organization with such a small size should not adopt forced ranking as a rigid performance appraisal tool… yet many do!). So… organization that use ‘Forced ranking”, will (at the end of its performance cycle) “distribute” its 100 employees as below or in similar distribution patterns (along the bell curve). Results?: 10 -20 percent of employees in the excellent range, 70-80 percent as average performers and the remaining 10% percent are at the lower end of the “horizontal totem pole” as I call it.
And as depicted above, salaries, promotions, incentives are neatly distributed based on the above curve.
So what is wrong? It is exactly what Meisler says: “…irresistible to scores of desperate corporate chieftains – but indigestible to a good many employees”.
Why is it “irresistible” to Organizations? Simply because it limits the percentage (and hence the number) of employees who can be defined as “excellent”. Thus saving on raises, and other perks.
Why is “indigestible” to a good many employees? The results are no longer the only measure but the Supervisor now needs to make a decision based on personal perceptions and thus must inevitably resort to another “evaluative (subjective) database” resident in their annual memory recall bank. The Supervisor naturally recalls only those subordinates who have been “visible” or vocal enough or naturally clever at positioning themselves. Everyone must find a way to make their work (or perception of their work) visible: This gives rise to the fantastic subset of dance steps, which by now employees know must be practiced throughout the year. Read the rest of my article