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Judge Not, Lest We Be Judged (by the Wrong Performance Criteria)

Forced rankings of employees have got to go.

(originally published by Booz & Company)

It’s that time of year again—when we all get together to engage in the rituals handed down by our ancestors. That’s right, it’s performance-ranking season. Rankings are truly the gift that companies just can’t stop giving. And just as with Aunt Ida’s fruitcake, it’s time that someone spoke the truth. But unlike with Aunt Ida’s fruitcake, I’m going to tell the world of this horror (Aunt Ida doesn’t “Internet”).

Performance rankings have long outlived any useful purpose on this earth. Allow me to make the case.

Performance rankings have long outlived any useful purpose on this earth.

Sadly, the annual performance review meeting is often the most personal interaction an employee has with their employer. A full 30 to 60 minutes of “me time,” complete with a detailed (and rarely accurate) analysis of one’s deficiencies. As an example, all I have left from the late 1980s is an acid-washed Guess Jeans jacket with paisley lining and the stinging memory of being rated a “three” in my first job at IBM. I don’t remember what being a three meant, but I knew I wasn’t a “one.” I certainly thought I deserved a ranking of one, but even if my boss did (and it’s a good bet he didn’t), he wasn’t going to give it to me.

At that company at that time, rankings were graded on a curve—just like organic chemistry 101. There couldn’t be more than a handful of one’s. Since pay increases and promotions were tied to the ratings, you couldn’t rate everybody highly. Each year, some people had to be declared the victors. Others? Not so much.

This made (and makes) no sense. To illustrate, let me choose another ratings experience from about 10 years ago. Join me, once again, in the WABAC machine, Sherman:

My boss: I see you’ve rated yourself as excellent in all areas. That’s not how we do it here.

Me: Why would I rate myself lower? If I thought I wasn’t doing as good a job as I could in an area, wouldn’t that be wrong? Shouldn’t I be striving to give you what I am capable of, rather than knowingly doing less than I can?

My boss: Um.

Me: I thought the goal was for you to help me know what else I could learn. But if I already know I am doing something badly, shouldn’t I be fixing that before we get here?

My boss: But I’ve always rated myself high in some areas and low in others.

Me: Why?

My boss: Hmmm. Maybe I’ve been doing it wrong.

Me: Maybe you have.

This brings me to the crux of my issue with performance appraisals. They are supposed to be about getting us to improve. But they have the opposite effect. Companies spend 90 percent of the year trying to boost team performance and 10 percent tearing that endeavor apart by putting people in a situation where only a few can “win.”

What was I supposed to do about my grade at IBM? If I wanted to be ranked as a one, wouldn’t the obvious answer have been to bring down someone who was doing better than me? I could do that by withholding information others needed, by engaging in self-aggrandizement at the expense of the team, or by otherwise diminishing the importance of other people’s contributions. Some might call this insanity; Microsoft called it “stack ranking.” It destroyed morale in Redmond and rendered the company ineffective at many levels. Mercifully, Microsoft’s leaders finally just killed it.

Here’s my suggestion: Stop judging individuals and start judging groups. Evaluate departments against their goals, with managers included. Then judge higher-level executives by the aggregate performance of the multiple teams that comprise their units. Yes, my department may rate better or worse than my peer’s, but there’s a disincentive to making other sectors of the team look bad because we’ll all be lumped together at our boss’s level of rating.

Let’s stop pretending that performance ranking is about anything other than limiting the number of promotions and pay hikes, and accept that those things can and should be separated from measuring, and driving, business goals. Then again, maybe I’ve got this all wrong. After all, I was a three.

(Me? Harbor resentment? Never.)

David Silverman

David Silverman is an author, teacher and senior executive at a Fortune 100 firm.

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