|
New research suggests the common but quiet practice of culling the bottom 5% or 10% of workers improves company performance.
However, the controversial practice should be reconsidered after three or four years because deadwood can only be removed once, according to a study just published in Personnel Psychology. After that, new hires are less likely to be any better than workers who are let go.
Workforce magazine estimates that 1 in 5 large companies use some version of forced rankings, also known as "rank and yank." They require managers to go beyond evaluating workers and to rank them from top to bottom. Some middle managers have balked at putting workers in the bottom 10% if everyone is doing acceptable work.
It's a hard-knuckle approach. But it prevents workplace grade inflation, "where all children are above average," says Dick Grote, a consultant and author of the book Forced Rankings, due out in October. "It's probably the most controversial issue in management today."
The lead author of the new study, Steve Scullen, an associate management professor at Drake University, says his mathematical model found that a typical company has the potential for a 16% annual improvement in productivity the first two years. Additional improvements fall off steeply the fourth year and beyond.
Companies that fire the bottom 10% rather than 5% get faster and better results, Scullen says. But he stops short of recommending rank and yank because the study does not take into account intangibles such as morale, workplace cooperation, turnover and lawsuits.
Few companies discuss their policies after a wave of discrimination lawsuits. Ford Motor started its Performance Management Program in late 1999 but scrapped it just 19 months later because managers complained it was hurting teamwork and morale.
Ford still ranks all employees into three categories, including one called "improvement required." It no longer insists that a percentage of workers be in that category, spokeswoman Marcey Evans says.
Microsoft says it ranks employees, not to fire bad performers, but to give promotions and bonuses.
Grote, a fan of forced rankings, says that he is surprised at how few lawsuits are filed and that judges throw most out.
Sprint used rankings for a year in 2003 and says it discontinued the program because it found more effective ways to differentiate performance. The program was never used to identify workers to fire, spokesman Scott Stoffel says, although fired employee Shirley Williams made that accusation in a pending age-discrimination lawsuit. Sprint says the average age of its workers rose using rankings.
|
