Dear Workforce What Alternatives to Forced Distribution Could We Use to Measure Employee Performance

Dear Forcing the Issue:

We believe the disadvantages of forced ranking far outweigh the advantages, so you are wise to consider alternatives. Before describing another approach, please consider the following ideas.

First, some organizations tie their compensation decisions too tightly to overall ratings. This places pressure on managers to adjust the overall rating to achieve the desired merit increase, or to take the easy way out and give everyone the same rating.

Instead, consider introducing additional factors into the compensation decision. This will take pressure off the performance rating and increase the likelihood of a more accurate rating. One typical additional factor: the person’s current salary relative to the salary range for their job.

Second, don’t use just one overall rating. Consider including an individual rating for each goal and competency for a more accurate overall rating. It’s harder to misrepresent someone’s performance against a specific goal or competency, assuming that you have defined it clearly and can gather solid performance data. This approach also allows human resources to audit overall ratings to determine if they are consistent with individual ratings. For example, it would be odd if an employee’s scores were far lower than most others in the company, yet he was designated as “average.”

Calibrating across individuals is often important as well, to ensure consistency in the use of the ratings. One of the best approaches is to conduct “calibration meetings” in which managers reach agreement on how the ratings are applied to roles that have similar job expectations. Trying to calibrate nurses with accountants would be an exercise in futility.

In preparation for a calibration meeting, the manager must have complete performance data for each employee, including ratings for each goal and competency, as well as a proposed overall rating. Appraisal conversations should be put off until after the calibration meeting. During the meeting, the managers then review the proposed overall ratings and reach consensus. An effective ground rule is that a manager must agree to change a rating. It should not be forced upon them.

Let’s assume your overall rating uses a five-point scale, where 5 is the highest rating. To make the meeting most efficient, begin with the individuals whose proposed rating is 5. Each manager who has proposed rating an employee as a 5 explains his or her rationale. Other managers may ask questions and introduce additional performance data, provided they have firsthand knowledge of the individual being discussed.

When all of the individuals rated 5 have been discussed, their managers are asked if they want to change any ratings. Other managers may indicate that one or more of their employees deserve a 5 rating as well, and they are given an opportunity to provide a rationale. Once all discussion is complete, the group reaches consensus on that group of individuals.

Discussion then moves to the individuals rated 1, the lowest rating, and follows a similar structure until the managers reach a consensus. Discussion next moves to the individuals rated 4 and then the individuals rated 2. For individuals rated 3, the middle category, do a quick check to see if any manager believes any of these individuals deserve a different rating.

Once all groups are considered, a final check for consensus can be completed. When the process is conducted in a fair manner, not only do managers walk away with confidence in their ratings, but they also have a strong group understanding of how to apply the ratings in the future.

SOURCE: Bill Coon, senior organizational effectiveness consultant, Development Dimensions International, Pittsburgh, Pennsylvania, March 3, 2005.

LEARN MORE: SeeForced Ranking: A Good Thing for Business?. Also read about alternatives toforced ranking; the ethics of forced ranking; why peoplewon’t discuss the topic; an opinion piece on theproblems with forced ranking; a new studyarguing that forced ranking is good for business; and more information onperformance appraisals.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.