forced ranking


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dick grote

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forced ranking

  1. 1. Knowledge Seminar 09-12-2013 Submitted to : Lt Col Prasad SN Submitted by : Group C9 Name PGDM No. Priyankar Das Dalal 13164 Rachit Kumar Gupta 13165 Riddhi Jaini 13166 Saad Abdul Wajid 13167 Saniha S Alva 13168
  2. 2. Forced Ranking • Jack Welch, CEO of General Electric, “Forced Ranking method, companies break down the workforce into 3 categories: The top 20%, the middle 70% and the bottom 10%”. • Top 20% must be loved and nurtured in the soul and wallet and the bottom 20% must be removed. • Welch said this must be performed annually. • It is unethical to "rank and yank" people
  3. 3. Author’s intent about the ranking method • A valuable component of a company's total talent management palette. • A supplement to and not a replacement for the familiar performance appraisal system. • A rigorous process for distinguishing the relative talent in your organization and eliminating the problems of inflated ratings and ratings variability. • Serve as a good check and balance for the results produced by conventional performance assessments.
  4. 4. Common misbeliefs • The cause of a significant amount of resistance to the procedure, is the belief that the people who are ranked in the bottom category of a forced ranking process are "poor performers" . • People who end up in the bottom ranking category are necessarily poor performers is a common belief. • This book is about helping us to be better able to identify and understand the talent pool. • Jump-starting a lead development process for those organizations that have gone stale.
  5. 5. The differentiation of talent • A performance appraisal was conducted and at that time GE had four performance ratings: Outstanding, Above Standard, Standard, and Below Standard. • The manager Ray Moeller gave him Standard or Below Standard in all the boxes. • The author hopped jobs from United Airlines, moved to PepsiCo, then to Dallas and finally to Frito-Lay
  6. 6. Relevant questions • How should rewards be allocated? Who should get a big raise: who should be denied any increase at all? • What is the depth of our talent pool? Do we have the people we need to meet the demands of the future? •Are there pockets of excellence and pockets of mediocrity within the company? • Do we have a level playing field in our talent assessment and performance evaluation practices?
  7. 7. The Demand for Differentiation • "Differentiation is the mother's milk of building a performance culture," - Larry Bossidy, chairman of Honeywell and ex-CEO, GE • The best performers quickly discover that their immediate supervisor or the organization as a whole is unwilling to do any more for them than he is for those whose performance is not nearly as good. • They either leave for employment with a company that truly values and rewards excellence, or they slide down the performance curve to a spot just comfortably above the middle
  8. 8. Contd. • The weakest performers discover that they are in a culture that is greatly to their liking, where nothing more Is asked of them than they are willing to deliver. • Every member of the organization wants the answers to two questions what do you expect of me? And, how am I doing at meeting your expectations? • Obligation to provide an honest answer.
  9. 9. Absolute and Relative Comparisons • When performance is appraised using an absolute comparison approach, an employee is evaluated in terms of what he achieved and how he went about achieving it. • Problems: low expectation, varying levels of expectation. • When performance is appraised using a relative comparison approach, employees are evaluated In terms of how well they did compared to how well other people did. • Problems: comparison not on a scale but person to person.
  10. 10. • Rationale: Employers were not able to justify the reasons for cut-downs in the workforce. • Improved workplace: Research suggests forced ranking works only when carried out periodically. • Context: Difficult to measure extent of forced ranking in organizations due to the protean meaning of the word. • Forced ranking systems should be used for only a few years and then. Once the obvious and immediate benefits have been achieved, replaced with other talent management initiatives. • The only place where forced ranking is being used is the private sector. According to the author public sector companies don’t follow forced ranking and hence the productivity and complaints from the higher management is on the rise
  11. 11. Risk and Rewards Benefits • Forced ranking combats artificially inflated performance appraisal ratings and forces the truth into performance management. • The forced ranking process forces the information out in open. • Forced ranking is a valuable tool to supplement an organization’s overall talent management efforts. • Forced ranking procedure reduces favouritism, nepotism, and promotions based on factors other than performance. • Forced ranking provides a sound and defensible rationale for all important personnel actions-including pay raises, promotions, bonuses, developmental opportunities, layoffs and terminations. • Forced ranking jolts managers and organizations out of complacency.
  12. 12. Risks • The process may produce culture shock and generate an environment where competition trumps teamwork and corporate goals are sub optimized. • Some managers and some employees may resist the process. Employees may become demoralized. • Judgments made in forced ranking are subjective. • A forced ranking system may influence managers to concentrate only on developing their stars • Forced ranking process may unfairly penalize managers and departments that adhere to high performance standard.
  13. 13. Cont. • Forced ranking is not a sustainable process. It’s simply impossible to keep “raising the bar” indefinitely. • Forced ranking isn’t appropriate for an organization that already consists entirely of all-stars. • Comparing one individual against another - is somehow unfair. • Mistakes are inevitable. • Lower-ranked employees may believe that the ranking procedures produces illegally discriminatory results.
  14. 14. Getting Started Is Your Company Ready? What Ranking Scheme Should Be Used? • • • • • • 20-70-10 Quartiling Quintiling 10/10 1 to 5 Stack ranking and totem poling What Criteria Should Be Used for the Ranking Process?
  15. 15. Cont. How Often Should We Use the Procedure? Who Should Be in the Ranking Pool? Who Should Do the Ranking? What Information Should Be Provided to Rankers? What Should We Communicate About the Ranking System-and to Whom? Should people be told how they came out in process? How should the results be used? Should there be an appeals process?
  16. 16. Gettingthemechanicsright Critical components • The critical components are: Training those who will serve as rankers . Running the sessions themselves competently. • The success of a forced ranking system will be determined by the quality of execution.
  17. 17. Training Assessors: • Advantages of training managers who participate in the forced ranking system:  Skill development for making good decisions. Forum for solving concerns among managers regarding the system. Training platform for the ground rules and operational mechanics. Bridge between the top management and employees. Awareness of the forced ranking system.
  18. 18. Steps implemented before training • Creation of briefing books. • Bullet list creation. • Pre reading of articles on forced ranking. • List of benchmark individuals.
  19. 19. Implementation agenda followed by the author • Background – what their companies forced ranking process is all about. • Rationale – reason for implementation and the expectations • Outcomes – what will happen to the ranking among the managers when the process is over • Events to date- what has happened so far. • Mechanics- step by step plan of the process. • Skill building- developing the ability of the assessors to make good ranking decisions.
  20. 20. Building Assessor skills: • The primary skill required to be a good assessor is behavioural observation. • The organization should ask the assessors to develop a list of examples of behaviours that they would accept as indicators that the person has excelled in this area. • A list of deficit behaviours would be helpful as well. • Participants should be able to assess whether the individual under review is an A, B, or C player.
  21. 21. Tests to monitor the results: • Are there any significant differences in rankings between one department and another? • Are the people from work units that are universally known to be talent rich or poor performing represented in top and bottom categories? • Is there an there appropriate distribution of rankings at different job levels? • Are the people who are ranked in the lowest quartile genuinely at the bottom of performance curve?
  22. 22. Behind the scenes
  23. 23. FORCED DISTRIBUTION FORCED DISTRIBUTION is a procedure that involves tweaking the rules of performance appraisal system to either request or require a certain distribution of performance appraisal ratings. • Predetermined distribution of performance appraisal ratings • The distribution of ratings may either be required(“forced’’) or recommended (“guidelines”). • It is a person-standard evaluation.
  24. 24. Sample forced distribution rating scheme Distinguished Superior Fully Successful Needs improvement Unsatisfactory 5% 20% 50% 20% 5%
  25. 25. PROBLEMS 1.There is no flexibility in percentages of ratings allowed. low performing group all stars group 2.It mirrors a bell shaped curve. population is very small selection criteria is not random
  26. 26. A better approach Distinguished 5% max Superior Fully Successful Needs improvement 20-30% 50-60% 10-15% Unsatisfactory 2-5 %
  27. 27. QUESTIONS TOBE ADDRESSED Is the distribution scheme appropriate for an actual organisation? How well will the system meet the requirements of the managers of the under-performing and the all-star groups? How should it be applied to a work unit with a very small population? When, if ever should exceptions be allowed? How do you control for variations in the standards and expectations of various managers? Who will police the system ,making sure that the guidelines are being followed? What will happen if a manager ignores the guidelines?
  28. 28. GETTING THE FORCED DISTRIBUTION RIGHT The company could set a percentage for high ratings only thereby minimize the antagonism of low ranked employees. If bonuses are to be handed out at work they should be available to anyone who meets a given standard instead of making each person an obstacle to others success.
  29. 29. APPROPRIATEDISTRIBUTION GUIDELINES Suggestions that will be useful in determining if to have a distribution requirement in the performance appraisal system and how to make it the most effective. • Get wide input on what the appropriate distribution should be. • Provide guidelines, not rigid requirements • Allow managers to vary from the guidelines-but do not make it easy for them to do so
  30. 30. Getting the truth in performance management Performance Appraisal Forced Ranking Performance Appraisal programs typically effect everyone in the company. Forced Ranking systems usually only examine the top of the organization who have the greatest impact on the organization’s overall success. It largely focuses on the past. It focuses primarily on the future. It is the process for evaluating how well the person performed in the previous 12 months. It is the amount of stretch the person has over the 2 or 3 years to lead the organization into the future.
  31. 31. • • • • • The rater reliability/calibration process Rater reliability” or “cross-calibration” or “levelling” is the performance calibration procedure that is used to make sure that different appraisers apply similar standards in assessing the performance of their subordinates. Procedure -prepare preliminary report, calibration session,presentation,discussion,adjust ratings prepare final performance appraisal Advantages Disadvantages Problems
  32. 32. • Ground rules for the session-people with direct knowledge, no direct knowledge,discussion,confidentiality. • Calibration criteria-assessment item , measure and collaboration • Session mechanics-different coloured 4*6 sticky note… • Calibration factors-job complexity, complexity of goals,collaboration,expertise,skill versatility , talent development.
  33. 33. Calibration session to meet distribution guideline guidelines and calibration procedures are Distribution useful techniques for making an already-effective performance management process work better. How? • Examine number of ratings allowed for each category • Check for Variance • What is the target distribution • Recommend changes
  34. 34. Building Performance Management Accountability distributions of appraisal ratings, and calibration procedures Forced ranking, forced are all aimed at one objective: getting the truth into performance management. • Building Accountability through Performance Reviews responsibility of the reviewer - Ensure timely completion of performance reviews. -Ensure fair, thorough, and complete reviews. -Ensure inter-rater reliability. -Make sure that tough-minded, demanding performance standards are set. -Coach appraisers for success. • Using process evaluations to build accountability
  35. 35. Conclusion • Forced ranking is a relative comparison process which provides a separate and complimentary view through which performance can be assessed. • Along with other techniques and procedures forced ranking is a valuable and legitimate way of answering how one is doing. • Though conventional performance appraisal and forced ranking are important techniques; both have limitations, but together they can provide an accurate and well – rounded picture of strengths and weaknesses of each member of the team