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Forced ranking performance appraisal

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I. Contents of getting forced ranking performance appraisal

Forced ranking is a controversial workforce management tool that uses intense yearly
evaluations to identify a company's best and worst performing employees, using person-toperson comparisons. In theory, each ranking will improve the quality of the workforce. Managers
rank workers into three categories: The top 20 percent are the "A" players, the people who will
lead the future of the company. They're given raises, stock options, and training. The middle 70
percent are the "B" players, steady-eddies who are given smaller raises and encouraged to
improve. The bottom 10 percent are the "C" players, who contribute the least and may be
meeting expectations but are simply "good" on a team of "greats." They're given no raises or
bonuses and are either offered training, asked if they'd be happier elsewhere, or fired.
Why It Matters Now
Although most large organizations refuse to publicly discuss or even confirm whether they're
using some form of forced ranking, as many as one-third of Fortune 500 companies use such
systems, says Dick Grote, author of "Forced Ranking: Making Performance Management Work."
Forced ranking first gained attention at General Electric in the 1980s. The practice lost its
glimmer in recent years following Enron's downfall, which has been attributed in part to backbiting spurred by forced rankings. But with unemployment at its lowest level since the 1990s, the
talent war has heated up again, making it more important to identify top performers, since they're
being more heavily recruited.

Why It Matters to You

Forced ranking tends to be popular with large corporations that have hundreds or thousands of
employees and need to systematize their HR processes. If your workplace is one of theseand if
the company is in trouble and looking for solutionsforced ranking could be in your future. The
long-run impact should ideally be increased productivity, profitability, and shareholder value.
But sometimes a company culture can shift due to forced ranking, creating a more competitive
atmosphere and decreasing morale.
If you're in the market for a new job, spend some time researching which companies in your
industry use forced ranking. Some firms will not openly offer this information to potential

The Strong Points

By identifying their top employees, companies can jolt managers out of complacency, combat
artificially inflated performance ratings, and reduce favoritism, nepotism, and promotions that
may be based on factors other than performance. Managers can identify top performersthe
people they least want to loseand reward, keep, and train them to be future leaders of the
business. Forced ranking also provides a justifiable way to identify and lose workers who may be
holding the business back. About 40 percent of "C" players voluntarily resign, which is often a
happy outcome for managers, who can then hire better-quality replacements.

The Weak Spots

Companies can inevitably make mistakes using forced ranking, firing someone who might go on
to be a super star elsewhere or discouraging excellent performers by ranking them as mediocre
simply to fill a quota. Replacing lower-rung employees each year can also be costly and can
lower productivity in the early months of adoption. New data, including a study by Drake
University professor Steve Scullen, shows that forced ranking loses its effectiveness after a
couple of years, since the average quality of workers increases and there are fewer "C" players to
Critics also claim the system creates a competitive environment that can result in cutthroat,
unethical behavior; limit risk-taking, creativity, and teamwork; and discourage workers from
asking for help or extra training out of fear that they'll be identified as low performers. The
strategy has also resulted in legal troubles for such companies as Microsoft, Ford, Goodyear, 3M,
and Capital One, which have fought discrimination lawsuits filed by former employees who
claimed forced ranking was used to discriminate on the basis of race or age.


III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale

Rating scales consists of several numerical scales

representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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