Ethics/Social Responsibility Rank and Yank: Legitimate Performance Improvement Tool or Ruthless and Unethical Management?

Case Summary 

Organizations usually have systems for appraising the performance of employees. Performance appraisal helps organizations to determine how much each employee contributes to the achievement of organizational objectives. Jack Welch, a former CEO of General Electric popularized a particular performance appraisal system known as forced ranking. However, the system has not gone down well with many critics who have expressed distaste for it. The system has even earned a derogatory label of "rank and yank." The primary objective of the forced ranking system is to improve the performance level of operation by eliminating the bottom 10 percent performers and hiring new replacement employees who will perform at a higher level. As such, ranking judgments can be made in several ways. Although various companies have employed the forced ranking system, it has faced some legal challenges. For instance, Microsoft defended several discrimination suits challenging its use of forced ranking system successfully. Conoco, Ford Motor Company, Sprint, and Goodyear are also some of the organizations that faced legal challenges regarding the implementation of the forced ranking system. Although forced ranking can regularly trim the lowest performers and raise the bar for performance, it can be detrimental to a collaborative culture by creating competitiveness among employees. 

Critical Thinking Questions 

Question 7-14 

Forced ranking is not a good performance management system as it disrupts harmony in the workplace. Teamwork is an important factor in the workplace. This is because collaboration ensures that employees work collectively towards achieving organizations goals (Townley, 2014). However, the forced ranking system encourages competitiveness in the workplace, making the employees lack unity of purpose. Additionally, more employees would get job satisfaction under the forced ranking system, leading to more employee turn-over. In my opinion, forced ranking system compels employees to focus on their individual goals and lose sight of the company's mission and goals. 

Question 7-15 

The relative rating system compares the performance of an employee to other peers doing the same job. On the other hand, the absolute rating system focuses primarily on the performance standards that are directly related to the job. Therefore, the apparent difference between the two rating systems does not necessarily mean that the absolute performance judgments are wrong. Thus, the purpose of the appraisal will determine which system to apply. 

Question 7-16 

As a manager, I would prefer to use either the absolute performance rating system or the relative rating system, such as forced ranking system, depending on the reason for the appraisal. For instance, if I intended to promote from within, I would consider relative performance rating system because it would give me a broader net to pull from. On the other hand, I would employ absolute performance rating system while performing reviews because the system is based on the job. This is because the performance standards are relevant to the job. If I do so, minimum resentment will be experienced in the workplace. 

Question 7-17 

Yes. The absolute rating system focuses on the standards relevant to the specific jobs. As such, the performance appraisal is specific to the individual doing the job. It is important to realize that the human element adds to the differences between employees. Thus, the employee skills, personality, and behavior serve to guarantee differentiation among employees. 

Key Learning 

One of the critical lessons that I have learned is performance appraisal. I have learned that performance appraisal is the method by which an employee's performance is documented and evaluated. In performance appraisal, the management typically evaluates and provides feedback on employee job performance (Gomel et., 2010). Such feedback could include steps to improve or redirect activities as necessary. 

The second key learning that I have achieved is that there are two primary performance rating systems; absolute performance rating system and relative performance rating system (Deepa et al., 2014). In the absolute rating system, an employee is evaluated individually without enforcing any comparison with his peers. On the other hand, relative performance rating system involves evaluating an employee based on comparisons among a group of peers. The two systems are used independently depending on the reason for appraisal. 

References 

Deepa, E., Palaniswamy, R., & Kuppusamy, S. (2014). Effect of performance appraisal system in organizational commitment, job satisfaction, and productivity. Journal of Contemporary Management Research , 8 (1), 72. 

Gomez, L. R., Balkin, D. B., & Cardy, R. L. (2010). Managing human resources. New Jersey. Prentice Hall 

Townley, B. (2014). Selection and appraisal: reconstituting. New Perspectives on Human Resource Management (Routledge Revivals) , 92 .