BU Comparing Co Workers Against Each Other Case Study Questions

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11:10 4 u LTE ebookair.com Before After 1. b 2. a 3. b 4. c 5. d Number Correct 6. b 7.b 8.b 9.a 10. d Number Correct Case Case 5.1: Comparing Co-Workers against Each Other: Does This Motivate Employees? Rigid rankings hinder the teamwork and risk-taking Holiday shopping, year-end deadlines, and emo- necessary for innovation. But what combination of tional family dramas aren't the only stresses in methods works best? December. 'Tis the season for companies to embark 138 Chapter 5 Motivation 139 on that dreaded annual rite, the often bureaucratic and always time-consuming performance review. The process can be brutal: As many as one-third of U.S. corporations evaluate employees based on systems that pit them against their colleagues, and some even lead to the firing of low performers. Fans say such "forced ranking” systems ensure that managers take a cold look at performance. But the practice increasingly is coming under fire. Fol- lowing a string of discrimination lawsuits from em- ployees who believe they were ranked and yanked based on age and not merely their performance, fewer companies are adopting the controversial management tool. Critics charge that it unfairly penalizes groups made up of stars and hinders col- laboration and risk-taking, a growing concern for companies that are trying to innovate their way to growth. And a new study calls into question the long-term value of forced rankings. “It creates a zero-sum game, and so it tends to discourage coop- eration,” says Steve Kerr, a managing director at Goldman Sachs Group Inc., who heads the firm's leadership training program. Even General Electric Co., the most famous pro- ponent of the practice, is trying to inject more flexi- bility into its system. Former Chief Executive Jack Welch required managers to divide talent into three groups-a top 20 percent, a middle 70 percent, and a bottom 10 percent, many of whom were shown the door. More than a year ago, GE launched a proac- tive campaign to remind managers to use more com- mon sense in assigning rankings. “People in some locations take [distributions] so literally that judg- ment comes out of the practice," says Susan P. Peters, GE's vice president for executive development. Striking that balance between strict yardsticks and managerial judgment is something every com- pany, from GE to Yahoo! to American Airlines, is grappling with today. But finding a substitute for a rigid grading system is not an easy task. It drives truth into a process frequently eroded by grade in- flation and helps leaders identify managers who are good at finding top talent. That's one reason GE isn't abandoning its system. But it has removed all references to the 20/70/10 split from its online performance management tool and now presents the curve as a set of guidelines. The com- pany's 200,000 professional employees tend to fall into Welch's categories anyway, but individual groups are freer to have a somewhat higher number of "A" players or even, says Peters, no "bottom 10s.” Even those low achievers are getting kinder treatment, from a new appellation—the "less effectives"—to more specific coaching and intervention than in the past. The changes are key for a company trying to evolve its culture from a Six Sigma powerhouse to one that also values innovation. Tempering such rigid performance metrics, says Peters, "enables in- dividuals and organizations to be more comfortable with risk-taking and with failure." To drive that point home, the company's top 5,000 managers were evaluated for the first time this year on five traits, such as imagination and external focus, that repre- sent the company's strategic goals. Separating stars from slackers remains a long- standing part of GE's performance-driven culture. But for most companies, especially those without such cultures, the benefits of adopting a forced rank- ing system are likely to dissipate over the long term. A recent study lends hard data to that theory. Steve Scullen, an associate professor of management at Drake University in Des Moines, Iowa, found that forced ranking, including the firing of the bot- tom 5 percent or 10 percent, results in an impressive 16 percent productivity improvement—but only over the first couple of years. After that, Scullen says, the gains drop off, from 6 percent climbs in the third and fourth years to basically zero by year 10. “It's a terrific idea for companies in trouble, done over one or two years, but to do it as a long-term solution is not going to work,” says Dave Ulrich, a business professor at the University of Michigan at Ann Arbor. "Over time it gets people focused on compet- ing with each other rather than collaborating. Yahoo!, too, was looking for better dialogue and less demoralizing labels when it substantially changed its rating system, which compared employees' perfor- mance to an absolute standard rather than to each other. Libby Sartain, Yahoo!'s senior vice president for human resources, knew that review discussions at the Sunnyvale, California, tech leader frequently in- cluded the wink-wink "I wanted to put you here, but I was forced by human resources to do something dif- ferent" comment that discredits so many appraisals. Yahoo! stripped away its performance labels, partly in hopes that reviews would center more on substance and less on explaining away a grade. But that doesn't mean Yahoo! went all Pollyanna on its employees. To do a better job of finding and showering top performers with the rewards necessary 140 Part Two Understanding and Managing Individual Behavior to keep them from jumping ship in talent-tight Silicon Valley, the company also instituted a “stack- ranking” system to determine how compensation increases are distributed. It asks managers to rank employees within each unit—a group of 20 people would be ranked 1 through 20, for example—with raises and bonuses distributed accordingly. During reviews, employees are told how their increases gen- erally compare to those of other's into their rankings and ratings. But more flexible guidelines have to have teeth, too: Low-performing units shouldn't get more than their share of top grades, for example. Exceptions should go to peo- ple who set aggressive goals and come close to achieving them. Adjust Goals along with Grades wmle many companies use "calibration" sessions to Samo Yohana id about the nu hool that noufnum tall 11:10 4 w LTE A ebookair.com 140 Part Two Understanding and Managing Individual Behavior to keep them from jumping ship in talent-tight Silicon Valley, the company also instituted a "stack- ranking” system to determine how compensation increases are distributed. It asks managers to rank employees within each unit—a group of 20 people would be ranked 1 through 20, for example—with raises and bonuses distributed accordingly. During reviews, employees are told how their increases gen- erally compare to those of others. Some Yahoo! managers are livid about the new system. “It's going to kill morale," laments one senior engineering manager who says he's getting a stronger message to cull his bottom performers. Yahoo! says its new program doesn't automatically weed out a bottom group and was designed specifi- cally to reward its stars. Indeed, what Yahoo! has introduced in place of its old system shows how hard it is for companies to find ways to foster merit-driven cultures that coddle standouts while staying tough on low performers. Whether a company calls it stack ranking, forced ranking, or differentiation, there's no magic pro- cess," says Sartain. "We just want to make sure we're making our bets and that we're investing in the people we most want to keep. That's what this is all about." into their rankings and ratings. But more flexible guidelines have to have teeth, too: Low-performing units shouldn't get more than their share of top grades, for example. Exceptions should go to peo- ple who set aggressive goals and come close to achieving them. Adjust Goals along with Grades While many companies use "calibration" sessions to check that performance assessments level out among different managers, less than 10 percent fine-tune up-front goals across groups, according to Hewitt Associates. Choose Words Wisely Whether or not you strip the labels off your perfor- mance reviews entirely, as Yahoo! has, faint-praise terms such as “fully satisfies” make essential B-players feel like also-rans. Try "strong" or "successful” to drive home their value. Build Trust With so much focus on the tools and tricks of per- formance management, it's easy to lose sight of what really matters: the conversation. The Univer- sity of Michigan's Dave Ulrich suggests putting three simple words—"help me understand”—in front of difficult feedback. Best-Practice Ideas Review season is here, with all the time-consuming bu- reaucracy and stress that come with it. Here are five ideas to help put performance back into the process: Meet More Often Time-strapped managers may sound a collective groan, but year-end reviews on their own are hardly enough. The best managers meet at least three times a year, if not four-once to set goals, once or twice for an update, and finally, to review—with many informal check-ins in between. In this quickly shift- ing economy, goals may change, and fewer surprises will surface at year-end. Questions 1. What's your opinion regarding forced ranking performance appraisals? Do they motivate employees? Explain. 2. How would equity theory explain some employ- ees' negative reactions to forced rankings? Explain. 3. Based on Chapter 5, if you decided not to use forced rankings at your company, how would you motivate employees? Make Room for Risk As innovation trumps efficiency, some companies- including GE-are putting some wiggle room Source: Adapted from Sarah Boehle, "Keep Forced Ranking Out of Court," Training 45, no. 5 (June 2008), pp. 44-46; Paul Falcone, "Big- Picture Performance Appraisal," HR Magazine 52, no. 8 (August 2007), pp. 99-100; and Jena McGregor, “The Struggle to Measure Performance," Business Week, January 9, 2006, pp. 26-27. CHAPTER SIX Job Design and Performance Learning Objectives After completing Chapter 6, you should be Compare the job design concepts of range able to: and depth. Give examples of how managers can influ- • Describe the relationship between job ence how employees perceive their jobs. design and quality of work life. • Explain the differences between job rota- • Summarize the key components in the tion, job enlargement, and job enrichment. general model of job design. Discuss how quality is being designed into • Identify the key elements linking job design jobs today. and performance. Earlier chapters have described several factors that may affect job performance: Skills and abilities, perceptions, attitudes, emotions, and personality characteris- tics ual differences that play a role in shaping performance. Additionally, the direction intensity, and persistence of
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RUNNING HEAD: Case study

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June 8, 2019

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RUNNING HEAD: Case study
Case 5.1: Comparing co-workers against each other: Does this motivate employees?
In my opinion, the forced ranking performance appraisals are a good way to keep
employees in line. It is important for employees to be constantly reminded about their
performance so they can be able to make the required adjustments. Ending every year without
submitting an annual employee evaluation may result in the employees not being aware of their
employer’s expectations. It is important for the employer to make his expectations known so that
the company’s strategic goals can be met effectively.
In some cases, these forced ranking performance appraisals do motivate employees. Once
an emplo...


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