Beyond Forced Ranking: Norm-Based Ratings
What’s the attractiveness of forced rankings in employee performance management? Why, in effect, decide in advance that every work group must have 10% losers? The answer: it is a simple, bold–and therefore efficient–move that makes up for the failure of the organization to take the time necessary to develop its managers’ ability to judge employee performance realistically. As such, it suggests the worhip of efficiency while sacrificing effectiveness.
The practice of forced ranking requires managers to impose a bell shaped curve on their employee performance ratings. Thusly, each group ends up with 10-20% star, 10-20% unsatisfactory and 60-80% satisfactory performers.
What’s the thoughtful alternative? Management courage and commitment! In other words, norm-based ratings.
Norm-based ratings take time to develop, but once developed become powerful and part of the culture. They start with clear language around the numbers. A five-point rating scale is preferred by most organizations, with, for example, 3 titled Expected Performance and 5 titled Far Exceeds, each with precise definitions. Experience shows, though, that simply publishing such a scale is not enough. That’s where courage and commitment come in.
Management must have thorough discussions around the meaning of each level of performance rating before the rating period. And, during the rating period, leadership must periodically pull management together to discuss ratings and review planned ratings across groups to get agreement, to create norms establishing that a three in one department is equivalent to a three in another.
Meeting and working together, managers will gain the courage and commitment to call a three a three and so forth. It is hard work to initiate this degree of consistency, but once established, it’s contagious.
Please email comments to Tom.Hattersley@StarwayService.com.
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