Forced Ratings Cause More Problems Than They Fix

Recently we were working with senior leaders in a global company who faced a challenging morale problem. They hired talented capable people who were producing good work – but their talent was leaving. Leaders at every level were frustrated at the forced ratings performance management system.

Tracie, the Senior Vice President of Product Management, summarized the problem: “We’re wasting time and energy competing against each other. I’ve got good people on my team and I’d keep every one of them, but I have to rate everyone on a bell curve – so someone gets told they’re not doing a good job even when they are. No wonder they leave.”

It goes by many names: forced rating, stack ranking, and bell curves. You rate people’s performance by comparing them to one another. Those who finish lowest in the ratings are put on performance improvement plans, aren’t recognized for their performance or are even told to leave.

These systems are appealing because it seems like the formula (keep your top performers, replace the low) will ratchet up performance as everyone competes to be at the top of the ratings.

Problems That Prevent Performance

In practice, however, these forced ratings systems run into real-world challenges. There are several problems with stack ranks and bell curve rating systems:

• You create contradictions as you hire great employees, but then tell a segment of them that they’re not great after all.
• You create internal competition rather than outward competition.
• You create strong incentives to game the score rather than play the real game of serving your customer.
• You’re asking people for their least-best effort (what they have to do to stay alive) rather than their true best.
• Leaders don’t learn how to lead and manage for sustainable results.
• Managers aren’t allowed to reward genuine performance when talented performers end up on the low end of the rank.

Forced rating systems are helpful when a leader needs to jumpstart a large organization that’s caught in a morass of sloth, no accountability, and poor execution at every level. A quick ranking to identify truly poor performance and remove it from the organization sends a message that things are changing.

In essence, forced rankings are used to compensate for poor leadership. Successful frontline and middle-level leaders frequently succeed despite, not because of, forced ranking systems. These systems become another barrier they have to overcome on the way to sustained results.

Forced ratings are an attempt to compensate for poor leadership.

For the long-term, however, the answer to sustained transformational results isn’t forced rankings. If the problem is poor leadership, it should be fairly obvious: fix the problem.

Motivate Your Team: The Alternative to Forced Ratings

If you’re struggling to reboot the leadership in your organization, or if you’re a team leader who wants to transform and sustain breakthrough results, start here:

• Hire fantastic people.  Identify the competencies your top performers share in common and interview for those traits.
• Cultivate and create systems that help top performers to excel. What is the number one frustration that prevents your team from excelling? What can you do to remove it or lessen its disruptive impact?
• Align compensation with what you really want. If you need a team to perform at an objective level of excellence, compensate them for that performance. Don’t turn the team against itself with artificial comparisons that don’t benefit the work that’s done for your customers.
• Invest in your leaders and managers – formally or informally, with budget or without the budget. No excuses. Give your managers and leaders the tools they need to succeed. If you need a place to begin, check out the free Let’s Grow Leaders Facilitator’s Guide that accompanies Winning Well: A Manager’s Guide to Getting Results Without Losing Your Soul.
• At a minimum, equip and expect yourself and your managers and leaders to:
  • Set clear, shared, mutually understood expectations that include purpose & meaning and the MIT behaviors that lead to success.
  • Train and equip their people to perform well.
  • Hold themselves and their people accountable.
  • Help team members to grow with training, coaching, encouragement, and challenge for high performers.
  • Celebrate success.
  • Hold leaders accountable for their results and how they achieve them. I often see senior leaders talk about how they expect their team leaders to perform, but they never actually reinforce the behaviors or hold their direct reports accountable.

Your Turn

Remember, you can’t replace the work of a human leader with a formula. Invest in your leaders and hold them accountable for leading.

Leave us a comment and share your thoughts about forced ranking systems or your #1 tip to make them unnecessary.