The resultant rankings are often used during decision making about pay rises or promotions. But are they fair?
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A brief appraisal of staff ranking systems -
Staff rankings work on a comparison basis. Scores are given to individuals, these are designed to indicate if their performance is above, equal to or below that of their colleagues. The resultant rankings are often used during decision making about pay rises or promotions.
Depending on what system is used, or even the nature of the business, staff ranking criterion can be very focused or quite vague. For instance, it's fairly easy to be specific about sales reps ranks, the number of closed deals they have to their name will give finite numbers. More vague areas might be connected to ranking staff in terms of how personable they are - this of course would be a matter of opinion.
The advantages of staff ranking-
Some employees feel that staff ranking engenders a feeling of healthy competition in the workplace. If employees feel they must live up to their higher ranking colleagues they'll go the extra mile and work harder for the company. In addition, many organizations refer to merit assessments when awarding pay rises or promoting staff.
The disadvantages of staff ranking
It's natural to want to offer reward for employee's valuable contributions to an organization. Often though, ranking doesn't help greatly with that. It does recognise those who have done better than their colleagues but that's entirely different. Again we'll use sales as a point of reference. Sales are easy to calculate but you will see how things can go awry even with solid data.
The scenario is thus: We have five salespersons on the team. Let's take a look at their figures for the year.
- John $26,001
- Cameron $26,000
- Emma $25,500
- Zoe $24,495
- Mike $21,502
Let's say we will be offering rewards to the top 20% of the team most generously, with the 60% in the middle being eligible for less meaty prizes. That means John gets a significant pay rise, Cameron and Emma and Zoe receive smaller bonuses and Mike gets nothing. At first it seems to make sense, but it doesn't.
John gets the big prize but in reality he only sold one more dollar's worth of product than Cameron. Overall the differences between each sales member are very minor. Obviously this doesn't seem fair, in addition we need to look at how this sort of reward system affects the non winning team member, Mike and the others who fared less well than John: Cameron, Emma and Zoe.
It's quite likely that resentment can build up and that those who did not do so well will lose enthusiasm and perform even less well next time around.
The really staggering evidence that ranking systems don't offer anything of value comes when we examine the sums again. If each member of the team is earning a basic salary each year of $30,000, then none of the team members are really of worth to the organization. In fact the team costs the organization $26,502!
Ranking staff in this way does not assess worth and input.