What Are the Benefits of Performance Measurement Rankings to Determine Employee Performance?

Q: Like many companies, we have an annual performance review of employees. At the beginning of the financial year, KPAs, goals, targets are mutually agreed. There is a quarterly review of performance followed by annual review. Employees are rated on predefined performance criteria on a scale of 1 to 5. Subsequent to rating, we wanted our line management to rank employees against each other in order to have ranking order. Line management is not inclined to ranking, for obvious reasons. Is there any way to know if ranking is the right approach for our performance management?

—Really Clueless, assistant GM, manufacturing, Hyderabad, India

A. Your performance management system appears to have the three main components necessary for its success — goal setting, performance measurement and periodic feedback to each employee. If these processes are well designed and executed, both employee and supervisor can properly gauge progress toward job specific requirements and the development of skills and attributes needed for future advancement.

Performance management’s primary focus is “this employee.” Employees compete against known job standards and goals, not other employees. Mention of others’ achievements are typically done only to provide performance measurement and goal creditability (“They did it; you can too.”). As such, ranking is rarely done as part of a performance management process.

Ranking is, however, an important part of other legitimate business processes. Without a good performance measurement ranking process, for example, meaningful succession planning would be hard to accomplish. Organizations need to know which employee is best qualified for a specific future position, and who is second best.

The pushback you are getting from line management may be because, unlike a well-designed performance management system, the competition inherent in ranking systems makes managers uncomfortable. Getting executives to agree on something as simple as which of a limited number jobs is the most important is difficult. Getting them to agree on which employees, in their and other departments and types of jobs, are the most skilled and worthy of career advancement is many times more challenging.

When you rank employees through performance measurement among other methods, you impact their potential for advancement. Opinions and politics are rife in most ranking systems; defendable metrics scarce. A “champion’s” position or influence often has more impact on decisions made than the employee’s demonstrated abilities.

As a result, I’ve seen numerous performance measurement ranking systems fail to achieve their goals during my career. Most don’t deliver any better results than would be expected from admittedly subjective selection processes. It isn’t unusual for someone ranked highly for a particular future position to be passed over when the position finally becomes available or to fail miserably when they receive the position.

Ranking also causes some people to feel “less than.” If you are No. 3 on the list for a position that you really want, it may negatively impact your motivation. This is especially true if the ranking process is perceived to be less than fair.

You can reduce the pushback on rankings and improve their value to your organization by taking the time to develop the process. Ensure that the ranking system you develop is transparent, based on the demonstrated attainment and attributes of each employee, the actual needs of each job and that the effectiveness of the decisions made are periodically audited, leading to process improvement if needed, and you will significantly improve everyone’s willingness to use performance measurement ranking.

SOURCE: Rick Galbreath, Performance Growth Partners Inc., Bloomington, Illinois, Sept. 13, 2014.