Introduction
It is a concept that introduces a system of motivation and development for workers called forced rankings. Furthermore, employees who function in a self-regulatory mode while pursuing a goal require less time to make goal-related judgments, and block troublesome impulses that may otherwise prevent them from completing a difficult task according to London (2004). Consequently, there is a need to analyze and develop such a concept in the company.
Purpose
The purpose of this paper will be to introduce the system of applied forced rankings. The pros and cons of this methodology will be discussed, and third-party sources from qualified academic researchers will be cited. Moreover, the general idea is to teach the leadership team about ratings in the performance management system. As a result, the potential benefits of the introduced concept should be discussed and presented.
Goal
The main goal will be that after getting acquainted with the information provided, managerial accounting agents will begin to implement the above system in the workflow. Furthermore, accumulating recommendations that will positively affect the development process is considered a secondary goal. Consequently, it will be expected to increase the overall efficiency of employees, stabilize the financial turnover, and strengthen the team given the events taking place in the world.
Process
After providing basic information about the applied forced rankings, including the results of conducted third-party studies, the pros and cons of this methodology will be presented. Then, a technological implementation of the concept and various recommendations regarding it will be presented. As a result, such a structure will give a wide retrospective on the topic.
What is a forced ranking system?
First, it is important to develop an understanding of the system. A vitality curve, also known as forced ranking, is a modern management technique that assesses, ranks, and grades workers’ job performance by comparing them rather than against established norms (Smither & London, 2009). Employees are placed into three groups in the forced ranking process: A, B, or C (Smither & London, 2009). Thus, the presented divisions of workers are the basis of forced rankings.
Employees that are the most engaged, driven, enthusiastic, open to cooperation, and devoted form the A group. They make up one-fifth of the population.
Employees in the B group are less engaged and driven, yet they are critical to the company’s success since they are the majority. This group makes up the middle three and a half fifth of the population.
Employees in the C category are typically non-efficient and are not interested in the working process. They make up the lowest half-fifth of the population. Consequently, such quantitative limitations are the key to understanding the presented system.
Companies can shake managers out of complacency, challenge falsely inflated performance evaluations, and decrease favoritism, nepotism, and promotions based on criteria other than performance by recognizing their best staff (Serat, 2017). Managers may recognize high performers—those they don’t want to lose—and reward, retain and teach them to become future company leaders (Serat, 2017). Thus, forced rankings may develop a new culture of efficiency among workers.
The forced ranking also gives a justified means to discover and dismiss employees who are causing the company to lag. For example, around 40% of Group C workers willingly resign, which is usually a good thing for managers because it allows them to acquire better-quality replacements (Porter, 2019). As a result, the atmosphere in the company will become less stressful and more result-driven.
Pros and cons of a forced ranking system
- Workers’ Efficiency: As there will be more motivation to grow, employees would become more efficient in the workflow.
- Managerial accounting development: To implement such a system, managerial accountants will have to use all of their knowledge to make the system work properly.
- Talent aggregation: With a linear curve of progression, group A will mainly represent worthy talents that will support each other and thus, aggregate others.
- Increasing financial income: By having proper management, it will be possible to gain more income from an increased amount of jobs workers will conduct.
- HR team’s acceleration: With a forced ranking system HR team will have fewer problems with finding candidates.
- Complicated system: The forced ranking system is complicated and needs serious time and financial recourses.
- Fluctuation in standards: As workers will be evaluated according to their mediocre results, at first the quality of standards may fluctuate, but it will stabilize soon.
- Implementation issues: Forced ranking system requires the use of both technological and humanitarian knowledge and skills, thus without proper investments issues can occur.
- Worker union dissatisfaction: From a sociological standpoint, such a system is frequently considered as a capitalistic and negative tendency. Though, with proper presentation and balancing between the interests of both company and the people, it is possible to avoid such problems, according to Porter (2019).
Using technology to evaluate and rank employees
The technology can be used in many different ways to evaluate and rank employees. However, it is worth highlighting the main points that are worth navigating to achieve the task effectively. The main factor is the increase in salary for group A. It should significantly exceed the average value to motivate employees to move up within this group (Porter, 2019). Moreover, such incentives should be represented by regular bonuses as an alignment of the KPI system, the increase in the prime rate of project work, and a properly implemented system of deadlines according to Porter, 2019. In this way, employees will not have a sense of permanence, but there will be a constant incentive to perform at their best.
Another important aspect of this system should be a technical basis. To keep an impartial record of employees’ activity, it is necessary to combine the use of CRM systems such as Jira (Serat, 2017). On the other hand, in the case of project work, alternatives such as the task system in Trello may also be a suitable solution for small group work (Serat, 2017). Thus, there are ways to decrease the need for manual corrections in the workflow of evaluation.
The final detail of employee evaluation should be its transparency. The applications of new technologies, social media, and big data are transforming the world of work (Church et al., 2015). When a person can observe what his actions lead to a higher rating, he will be able to analyze his activities and independently apply effective development strategies within the company. Consequently, such a task is what makes the system effective and complicated at the same time.
Recommendations
Based on the previously described pros and cons, using an intelligent ranking system is directly related to the success of building capable forced rankings. The following guidelines will help the managerial accounting group to better understand how to start the development phase. Thus, it is an essential part of avoiding most of the problems that other companies often face.
First, it is essential to consider developing the system in advance – one needs to calculate the privileges and bonuses of Group A salaries and Group C penalties. Secondly, it is necessary to create a system of recoils for employees in group C, so they do not expect to be fired and try to improve their performance. Thirdly, creating favorable conditions for Group B is necessary, as most of its representatives will be the foundation for worker unions (Porter, 2019). The main principle should be a balance between the financial cost to the company for the best workers and at the same time the attractiveness of being in this group for the average worker. Such practices would reduce the layoff rate and attract more applicants in the long run.
Conclusion
In conclusion, this presentation is the first step in creating and developing “forced ranking. Its ultimate goal will be to increase the efficiency of most employees and increase the revenues of SFMTA. Thus, the result will allow us to undertake the implementation of more complex systems in the future. Moreover, the resulting knowledge is sufficient to begin creating the presented concept. By analyzing the essence of this system, its main pros and cons, and ways for the right strategy for implementation, one will not encounter the main difficulties, which in most cases occur in other companies. Such a step is important enough for all of us; it will allow developing various humanitarian areas in the company and gain valuable experience.
At this point, it is necessary to create a temporary department, which will be engaged in thinking and calculating bonuses for Group A employees and Group C. After that, the HR department can be entrusted with regulating and using the system. Consequently, after creating this department, it will be possible to discuss the subtleties further and conduct social surveys of its employees.
References
Porter, M. (2019). Supply chain integration: Does organizational culture matter? Operations and Supply Chain Management: An International Journal, 12(1), 49-59.
Serrat, O. (2017). A primer on talent management. In Knowledge Solutions (pp. 385-393). Springer, Singapore.
Smither, J. W., & London, M. (Eds.) (2009). Performance management: Putting research into action. San Francisco, CA: Jossey-Bass.
London M., Mone E.M, and Scott J. C. (2004). Perfomance management and assessment: Methods for improved rater accuracy and employee goal setting. Human Resource Management, 43(4), 319-336.
Church A. H., Ginther N. M., Levine R., and Rotolo C.T. (2015). Going Beyond the Fix: Taking Performance Management to the Next Level. Industrial and Organizational Psychology, 8(1), 121-129. doi:10.1017/iop.2015.10