What is an advantage of forced distribution performance management systems in a sales organization?
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Workforce.com Pricing
Archive Apr. 30, 2002
Today’s business environment and the shortcomings of existing processes are prompting companies to rethink performance management. Now more than ever, it is critical to identify the top performers and distinguish them from the underperformers. Hence, many are revisiting an old tool: forced ranking. Forced-ranking systems, established years ago at companies such as GE, are increasingly being reassessed. In a nutshell, these systems typically either align people in preset “buckets” (such as the top 20 percent, the middle 70 percent, and the low-performing 10 percent — the system used at GE) or rank them by performance from best to worst. Below, we’ll address how organizations currently use forced rankings, consider how such rankings complement existing ways to manage performance, and identify which organizations, functions, and cultures find them most appropriate. How effective is performance management? But does performance management work? Numerous industry surveys suggest that indeed it does not. In a recent Andersen survey, less than 5 percent of managers and employees alike were very satisfied with the process in place at their companies. Here are some reasons for the dissatisfaction:
The Andersen survey also found that approximately half of HR professionals, 48 percent, said their systems were set up more than four years ago (with 40 percent dating back more than six years). This seems to suggest that these systems have not kept up with changes in the workplace. Are we measuring the right things? Forced Distribution aligns employees in accordance with pre-assigned performance-distribution percentages (e.g., exceeds expectations, meets expectations, does not meet expectations). It is a person-to-standard comparison. Peer Ranking, on the other hand, ranks employee performance from best to worst. This is a person-to-person comparison (e.g., Amy is 1, Bill is 2, Sherry is 46, etc.). Whether you are a friend or foe of forced ranking, this approach does not take away the responsibility of having a well-thought-out performance-management process. Since it is an overlay to the existing structure, ensure that the current process is effective by addressing these key points:
The pros and cons
Those who are opposed to forced ranking suggest that the process may:
Determining organization fit
The legalese “Ensure that the process is clearly communicated and that training on setting performance goals, improvement plans, and feedback occurs,” says Wilde. He also encourages HR managers to work with their legal counsel to:
In the beginning
Implementation doesn’t happen overnight, so assume that it is a multi-year process and plan accordingly. Does it help you make decisions? The core issue is whether these processes provide the ability to make people and workforce decisions — who to develop, promote, redeploy, or terminate. In the end, these are the outcomes that move a process from administrative to strategic and make a difference to both individual and organizational performance.
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