So-called “rank and file” performance appraisals became a popular concept at Jack Welch’s General Electric, and the idea only spread from there: Why use vague, unquantifiable adjectives to describe performance when you can have numbers and rankings?
Using “forced ranking” or, more colloquially, the “rank and yank” model, GE made its employees compete against each other, with those at the bottom of the curve facing penalties — from a denial of raises or bonuses to losing their jobs.
GE has since eliminated the annual performance review altogether, and the rank and yank model is much less common in the workplace of 2015. But there are still organizations such as Amazon that use a rank and cull system that essentially reduces employees to a single number: Their ranking.
The process has been found to demoralize employees and create animosity among teams, according to a 2014 report by Deloitte, which suggests it’s not just employees on the low end of the performance spectrum who are unhappy.
“A forced bell curve diminishes the value of the top performers and pushes many mid-level performers into the bottom. In the process, it inadequately rewards top performers and fails to motivate middle-of-the-road employees.”
Rank and yank performance management has a deleterious effect on trust and morale among employees who are forced to constantly compete against each other, according to Bill Bradford, senior consultant at Performance Management Consultants in Ottawa.
“It creates what I call a shark culture — survival of the fittest. So in those situations, if your business is largely transactional, and client or customer long-term relationships don’t really matter, where there’s not a long-term consequence of your behaviour, I guess from a certain commercial point of view you can get away with it,” he says.
“But if you have an organizational purpose of vision that is longer term, all you’re going to do is alienate people. You completely destroy any hope of what used to be called the unwritten relational agreement between employees and the organizations.”
Anytime performance management isn’t done well, it can alienate workers, says Skye Lee, engagement manager at Trident Consulting in Vancouver.
“The biggest issue with performance management is really around the communication piece. I think most people start to feel alienated and withdraw from an organization when they feel like a) they don’t know what their performance management criteria are, and b) they don’t know where they stand within that criteria.”
Changing the system
There has been a great deal of change around performance management systems over the past decade, says Bradford.
“Recently, we’ve seen that Microsoft and General Electric have completely done away with their annual review process.”
Still, other organizations will likely never remove the ranking element of performance management, he says.
“It depends a lot on industry. In very competitive things like in investment banking and sales, some of those sorts of things, I think it’s almost so innate to the industry, it will always continue. I guess you have to do some kind of benchmarking... the whole concept of a review is designed to give shareholders or management some sense that there is some level of engagement or management of the performance of employees,” says Bradford.
“There’s been this terribly false reliance on appraisals rather than day-to-day management. I think, for most people, it carries such a historic, judgmental cache that it’s de-motivating for most people. There’s no question about it.”
But is removing the “rank and yank” philosophy, or nixing annual reviews altogether, enough to fix performance management?
Bradford doesn’t think so.
“The biggest issue, the biggest turnoff, is really the skill of managers to actually engage with employees, either on a day-to-day basis or when it comes to any kind of discussion,” he says.
And with the evolution and proliferation of e-appraisals and online processes, performance management has in some ways become even more impersonal, says Bradford.
“The world is just rife with different models online. And I’ve worked with clients who have put in place very sophisticated e-appraisal programs, and it kind of alienates employees and just makes them feel like a number in the process… and then management makes its conclusion and passes its judgment,” he says. “It’s worse than doing nothing.”
A lot of managers and employees also tend to get fed up with data fatigue.
“These things are often driven by HR processes that are kind of disengaged from what really matters between an employee and their manager,” says Bradford.
“It’s like so many other dimensions of technology — because the technology does it, it’s assumed that it’s a good thing to do. And I’m not opposed to the use of technology but it’s just become so complicated, and HR has a tendency... when the bandwagon starts to roll everybody jumps onboard.
One of the critical pieces in effective performance management processes is the relationship between manager and employee — and the manager’s emotional intelligence to conduct those conversations effectively, says Bradford.
“I’m a bit cynical about a lot of the processes without emphasis on relationship. If you ask most employees — public sector, private sector, NGOs, it doesn’t really matter — I don’t know what the number would be on a scale of one to 10 on ‘How effective is your manager in engaging you in meaningful conversations about your work?’ But I would guess the score would be between three and four.”
Giving an employee a series of numbers about how they rate as opposed to a meaningful conversation is de-motivating, he says.
“It just says, ‘I’m one of the herd — I’m not an individual.’ And, again, it gets back to the engagement issue, it gets back to the emotional intelligence of management to connect with people on a personal level, which is the centre of motivation, really.”
Before the advent of online technology, flatter organizational structures and larger organizations, there was almost this unspoken contract between employees and employers, says Bradford.
“There wasn’t quite as much nitpicking around the fringes of benefits and that sort of stuff. Sometimes, organizations let certain things slide, and people felt that they were part of a community. So you just have no community of engagement, you have no community of purpose when you have that shark culture, you have that survival of the fittest,” he says.
“And then... you have senior managers say, ‘Well, why aren’t our employees more loyal?’”
It’s a short-term talent management perspective, and you’ve got to decide if that works for your organization, says Bradford.
“It all depends on the pressure on the shareholder return — short-term versus long-term. And, unfortunately, it often doesn’t matter how enlightened or progressive (HR’s) concepts or ideas are, sometimes HR is on the receiving end of the business plan: ‘Find a way to make it work whether that makes sense in the long term or not,’” he says.
“So it’s a very destructive thing.”
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