Attention, managers. Are you stuck in the past using the stack ranking form of performance appraisal? We get it. If you’re operating in a highly competitive industry, you need to quickly identify your rock star employees, as well as the team members who need a little more guidance. The problem is nobody likes the stack ranking systems. Here’s why and here’s what you can use instead.
Stack Ranking Shortcomings
Research shows that when managers measure employee performance against others in a department, hostility brews. Who can blame an employee for feeling enraged when they learn the person in the next cube (the one who always comes in late) is getting a better raise? As a manager, you may think this information doesn’t get out, but it does. In a stack-ranked world, employees feel their managers don’t appreciate them as individuals. And when employees know they’re being measured against their peers, they may engage in unhealthy competition.
As a manager, you probably don’t favor a stack-ranked system, either. It’s difficult, and somewhat arbitrary, to rank employees linearly. After all, some workers excel in areas that aren’t being measured. And those same workers might not be doing as well in the ‘measured’ metrics.
Employees prefer to be measured against the goals managers have set for them personally. And, you probably prefer this kind of system, too.
Your team members excel when they get frequent feedback. Managers shouldn’t wait an entire six months or a year to provide feedback. Your team members will respond as soon as they hear you’d like to see them pay more attention to detail. And when you talk with them about personalized goals, they will be more willing to give feedback. During these sessions, they’ll tell you which projects they’ve enjoyed. And, they may explain what they need in order to do a better job. That kind of honest feedback won’t surface in a stack ranking appraisal system.
‘Pro Social’ Bonus System
Is there ever a case for involving other employees in a performance appraisal process? Absolutely. A recent column in The Horizons Tracker describes one such system. Companies can opt to use ‘pro social’ bonuses. In this case, employees decide which team member among them deserves a financial reward for a job well done. Research shows that the ‘gifted’ employee, along with all other team members, typically improve their performances after these awards are handed out.
It’s time to close the book on stack ranking performance appraisal systems. Think about the type of employees do at your company. Develop a goal setting and feedback system that measures success at those tasks and start making changes.