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Performance Rankings are Immoral

By Bob Rogers

Bob Rogers, Ph.D. Attempting to capture an individual’s performance over a business cycle with one word or one number is dishonest at best. Labels that use single words or numbers may uplift a few, yet demoralize almost everyone who didn’t get the highest rating.

No wonder more organizations than ever before are looking to improve their current performance management process. A recent Brandon Hall study found that 71 percent of organizations today thought their performance management process needed considerable improvement. Another study by the Corporate Executive Board found that 95 percent of employees are dissatisfied with their approach to performance management.

One immediate way to start improving performance management processes is to do away with overall ratings or forced-ranking systems. Not only are they immoral, but they also are damaging to the individual and to the organization. You don’t need them; they destroy morale, trust, engagement, and job satisfaction. More and more companies have moved away from overall ratings or forced rankings, including Accenture, Microsoft, Adobe, and many others.

It's review time

Are you part of the 71%? Time to review performance management. View the full infographic.

How is it working… or not?

I was recently giving a speech on performance management when I asked how many in the audience worked at a company that had a forced ranking system. One woman from a Fortune 500 company raised her hand. I asked, “How is it working?” She replied, “I had to tell a direct report she was a “3” (worst rating), and she immediately started telling everyone she was a 3. She lost her enthusiasm and passion for her work, and her productivity declined. Before that, she was a fine, productive employee.”

The employee isn’t the only one who suffers with overall ratings or forced rankings. The organization suffers as well. Why? First, the inaccuracy of the ratings by supervisors has been proven in study after study, and the ratings are not correlated with performance results. Even more important, managers use the ratings or rankings to make key decisions on placement or promotions. They use it as a crutch instead of looking at the whole person and his or her competency profile to determine best fit. Consequently, they miss major facets of skill, experience, knowledge, or personality that would have helped them make better decisions.

I once was a manager in a forced distribution system and, having already been trained in behavioral assessment, I never had to lower a single rating for any of my direct reports. Why? Because I had collected better behavioral data on impact. Were my people better? Probably not, but I won the arguments. Sure, in a forced ranking system you usually get the “1”s or the “outstandings” right, but you don’t need that kind of system to know your superstars or high potentials.

As president of a global company for 25 years, we never had overall ratings and never used forced rankings. Our people think our performance management process works just fine, we can easily link performance to pay, and our managers have good in-depth discussions on talent with our executive team.

Performance conversations and feedback

The trend today is to focus on the quality and frequency of discussions focused on performance, development, and the future. Forced ranking and overall ratings are the antithesis of that trend.

Many companies in the last 10 years believed if they just had an online system, it would drastically improve their performance management process. They were wrong. Software platforms serve a purpose—to improve efficiency and compliance. And, they help with alignment of objectives to the overall strategy of the company. But they don’t improve effectiveness—that can be done only by improving the quality and frequency of the conversations between manager and direct report. And yet, some neuroscientists propose all feedback, both positive and negative, is harmful. That notion is totally false.

We believe that many—not all—people can grow through their experience or training with the right feedback and coaching. DDI’s own research on diagnosis and development proves that with thousands of leaders in all parts of the world. In addition, in Jack Zenger and Joe Folkman’s article, Feedback, the Powerful Paradox, their research supports the fact that virtually every employee wanted more feedback. Two-thirds agreed with the statement: “My performance and possibilities for success in my career would have increased substantially if I had been given more feedback.”

So the challenge is how to get managers to hold better quality and more frequent discussions about performance. If senior executives or human resources leaders think this will occur without a major initiative to develop those skills, they are mistaken. It doesn’t come with a title.

4 reasons why managers struggle

There are four reasons why conversations either don’t occur or aren’t specific enough to have impact:

  1. Managers aren’t held accountable for conducting them.
  2. Managers aren’t trained in the skills they need.
  3. Managers don’t develop the confidence to conduct the discussions, especially those involving constructive feedback.
  4. Managers don’t have enough specific behavioral data to reinforce good behavior or get the employee’s commitment to change behavior.

The most critical of all the above is number 4. Remember my example of never having to lower a rating because I was trained in behavioral assessment? That is the kind of training managers need, along with how to hold the conversation, how to deal with disagreements, how to deal with emotions, and, particularly, how to deal with direct reports who aren’t receptive to feedback (which the neuroscientists call a “fixed mindset”).

My experience tells me that some people aren’t open to feedback, which in turn tells me they won’t grow or develop as much as those who are. Morgan McCall’s research at the Center for Creative Leadership and his book, High Flyers, says that one of the two most important factors to success of senior levels is a development orientation (which includes being receptive to feedback and taking action on that feedback).

So, if you are reviewing or changing your performance management process, ensure that training your managers in the areas above is part of your change initiative. Dropping your ratings is a good start, but only the beginning. Getting managers to provide meaningful feedback, become effective coaches, and facilitate higher levels of performance is the harder part. Once these are in place, the real conversations about performance happen.

Remember: it’s not about the rating or the label, it’s about the conversations. Keep it “simple and often versus complex and annual” and you’ll be amazed at the results!

the bottom line on conversations

Robert W. Rogers is President Emeritus of Development Dimensions International (DDI).

Posted: 13 Nov, 2015,
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