Forced Distribution of Performance Ratings

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The forced distribution or stacked ranking is not the natural component of the performance management system.

It was introduced to highlight differences among employees. It was introduced to act on low performers. It could be in place for few years. But...

Today, many organizations kill innovations by not eliminating the forced ranking. Why?

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Forced Distribution of Performance Ratings

  1. 1. Forced DistributionHow can the Performance Management block Innovations? creative HRM
  2. 2. Executive SummaryThe forced distribution is the most controversial rule in the Performance Managementprocess. The managers cannot evaluate freely, they have to follow strict differentiationrules. Primarily, it was introduced to drive the differentiation among employees.However, it usually results in differentiation among visible and less-visible employees.The forced distribution of performance ratings allows the organization to differentiateamong employees, allocating training budgets to top performers. The promotionsshould be allowed just to top performers. However ...Today, the key growth driver is innovation. The forced distribution cannot coexist withinnovation successfully. The innovative employees usually do not rank best. Theemployees, who are visible to the management, usually rank best. The innovativeemployees take risks, they have many failures. They think about products and services.The innovative company cannot use the forced distribution for the performanceappraisals. It should also consider the total elimination of the formal performancemanagement process. creative HRM
  3. 3. Content• About creative HRM• What is the forced distribution?• Benefits of Forced Distribution• Weaknesses of Forced Distribution• Forced Distribution and Innovation• Download creative HRM
  4. 4. About creative HRM
  5. 5. Aboutcreative HRM is a website covering many HR relatedtopics... HR Management, HR Management Practices, HRStrategy, HR Models, HR Business Partnering Model, HRProcesses, HR Development, Organizational Design ...The website is new and fresh, a lot of new content will beadded during 2013. Please, follow creative HRM as you donot miss any news... cHRM TwitterPlease, feel free to visit creative HRM creative HRM
  6. 6. Forced Ranking
  7. 7. Appraisal Ranking Distribution• Organization sets clear and strict guidelines for managers how the expected distribution of performance ranking should look (forced distribution, forced ranking or stacked ranking) 60 %• Managers cannot rate employees freely, they have to meet the forced distribution• Organization runs calibrations on a company level to reach the internal equity No Investment Talent Development• Act on low performers Training Sessions Better performing teams can get the Salary Increases Higher bonuses advantage over low performing teams in 15 % 15 % the distribution 5 % 5 %• Unsatisfactory Improvement Needed Meets Expectations Exceeds Expectations Superior The organization invests into the development of the best top rankings and acts on the lower rankings creative HRM
  8. 8. Who uses forced ranking?• The key users are multinational companies, which need to drive and manage the performance management process globally• They require consistent and comparable results of performance appraisals as the HQ is able to plan international career paths of top talents• The forced ranking changes the environment in the organization. The employees become more competitive and focused on the delivery of results (or being visible)• The large organization runs the difficult calibration process as all managers meet the rating requirements• The forced distribution allows to identify the top players who will lead the company in the future. It is aimed to secure the position of the company on the market creative HRM
  9. 9. Benefits
  10. 10. Key Benefits of Forced Rankings• The forced distribution is a simple and consistent methodology. All managers understand the principles.• The employees are clearly divided into different groups and HR can target training courses, development programs for talents and manage the salary review process.• The forced distribution does not allow the inflation of good and excellent performance ratings. The managers are required to act on low performers.• The low performance are given the individual plan to increase their performance. They are required to meet the performance standards. creative HRM
  11. 11. Weaknesses
  12. 12. Weaknesses of Forced Ranking• Quotas can push the excellent employees down just because the manager needs to meet the distribution curve• The strong manager can lift the distribution curve for his or her department• The calibration does not depend on results achieved; it strongly depends on the visibility of the employee among others• Forced distribution can limit creativity, risk taking; it can weaken the ethics and negatively impact the corporate culture• The teamwork can be negatively impacted by the forced distribution; employees do not want to share ideas creative HRM
  13. 13. Innovation and Rankings
  14. 14. Innovation//Forced Ranking Innovation Forced Distribution• Unblock creativity • Be visible to your boss• Support teamwork and the boss of the boss• Inspire and get inspired • Join all strategic by others initiatives• Cross your • Present results of the responsibilities team• Open and honest • Sell yourself discussion required • Report your progress• No results delivered on regularly a daily basis • Focus on networking• Less presenting, more • Be careful in making thinking decisions creative HRM
  15. 15. What does innovation need?• Innovation creates the open and supportive corporate culture. The forced distribution is not compatible with the supportive environment. Innovation is not about the competitiveness; it requires employees to collaborate.• Innovative employees require different performance management system. It has to be based on the instant feedback. The overall yearly performance evaluation does not support their creativity.• Innovative organization is about less presentations and it is more about innovative experiments. It is about some successes and many failures.• The forced distribution manages costs of the company; innovation drives sales revenues and profitability. creative HRM
  16. 16. What is next?
  17. 17. Your next steps?• Do you need to drive innovations in your company? You should leave the forced distribution as soon as possible. It is tough managerial decision, but it is worth it.• How to evaluate the performance of employees? Check all possibilities for saying the immediate feedback. There are many online services focused on the instant feedback and “thank-you” available.• Do you need to manage your cost carefully? You should stay with the rigid performance management system. It is the best tool for the management of costs.• Do I identify my talents? That is the excellent question. creative HRM
  18. 18. Download and Follow
  19. 19. Download the presentation?Do you want to dowload this presentation?Please, click on the following link and you can download thepresentation in the PDF format:Forced Distribution of Performance Ratings creative HRM
  20. 20. Follow creative HRM on Google PlusFollow creative HRM on FacebookFollow creative HRM on Twitter

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