Monday, January 12, 2015

Stack Ranking

A couple of months back, HR had called us all in for a briefing session on how our performance evaluation worked. At that time, I didn't know that it was one of many different types of performance evaluation methods out there. Coming from a background of a small company and then to an SME before joining a conglomerate, I had limited knowledge of HR practices.

When I was in the SME, I felt that the performance evaluation was fairly reasonable where the amount of work we had done during the year was quantified and translated into a score. Of course the quality of work produced and employee attitude were self-rated and put up for discussion with the boss. Here was a gap for a biased review and I had heard complaints from co-workers disagreeing on the boss pulling down scores. I'm not aware of the further processes of the evaluation (so can't comment much) but I liked the fact that we actually counted how many resolutions drafted, meetings attended and minutes produced etc during the year. With this stock checking, we were able to compare our productivity with the previous year (to a certain level).

When I joined my current place, I had heard some murmuring on how unfair the performance evaluation was here. Having gone through one complete cycle myself, I would say that I have to agree to a certain extent. There are always gaps in the system and I think the onus should be on the boss to ensure that a fair and objective review is conducted for all his/her employees.

Scores are given on a general impression the boss has had of your performance. The question then comes in that the boss would not be fully aware of the performance of those employees who do not directly report to him/her. Although the self-rated scores are reviewed and approved by the direct superior before being escalated to the boss, the ultimate decision was the boss'. Things like portfolio difficulty are not documented in the review process and there is no element of quantifying our workload as well.

Then comes in the aforesaid HR briefing. In summary, we were told that all of us would be competing against each other and with other group function employees (since our department was relatively small) and we would be rated according to a normal distribution or a bell curve. This meant that there would be a 10-20% top performers, 60-80% average performers and 10-20% underperformers in every department. So among my colleagues, one or two of us MUST be labelled underperformers and these few would be in the watch list and targeted for improvement. This is fine and well if there are indeed underperformers among us which needed to be eliminated but what if every member of our team pulled their weight and was leaps and bounds better performers than other teams? Would this label of being an underperformer (for SOP sake) be a motivation to stay on and improve my performance? And what is the justification for a non-executive to be in competition with a manager? Obviously the manager would win hands down. I hope our HR actually uses some sort of a weighted score to take into consideration these inequalities of responsibilities in computing our evaluation scores. But from what we took home from the briefing, this issue was not addressed.

A week ago, I learned from an article shared by a friend that this methodology (the bell curve) was called stacked ranking. Many large corporations have used stack ranking including GE, Yahoo and Microsoft, but they had moved away from it eventually. Stack ranking has its virtues but I think it should be modified to include other aspects that would enable a more rounded evaluation to close the gaps. Employees are people too and classifying them into a category, especially a negative one, just because the boss was forced to rate someone down to comply with the system will not do any good to his/her motivation level. Losing a so-called underperforming employee will cost the company more than hiring someone new.

I hope I'm wrong about our stacked ranking system and maybe HR just didn't do a good job in communicating this information to us. If it is as we understand it, we will see our teamwork ebbing away in no time, especially after the bonus payouts and increment/upgrading.

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