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Many businesses utilize the forced ranking method to compare employees based on job performance. Workers are divided into three categories: A for high performers, B for ordinary performers, and C for bad performers. Despite its popularity, this system has significant flaws that hinder its ability to conduct a fair review. Management by objective (MBO) was created to overcome the shortcomings of the forced ranking method, and the purpose of this paper is to urge human resource experts to replace forced ranking with MBO. The paper identifies the drawbacks of the forced ranking system and suggests the strengths of the MBO system in promoting fair appraisal process and employee development.
Drawbacks of the forced ranking performance appraisal
The forced ranking performance appraisal system has several downsides as pointed out by Grote (2005). The first limitation is that this system may result in an environment where teamwork and collaboration are ignored for competition amongst the employees. The system compares one employee to another, pitting them against each other and this promotes excessive competition and conflict at the extent of teamwork and the pursuit of organizational goals (Grote, 2005). Such a culture is toxic, and the implication is that employee productivity, loyalty, and productivity are adversely affected.
The second drawback is the resistance shown by managers and staff towards the system. The use of the different categories to which employees are assigned is insensitive and demoralizing. Most managers will agree that none of their employees underperform and therefore, an employee in the C group gets demoralized because they will be terminated. There is also a high likelihood that employees in the B class will get comfortable and think that moving to the A group is impossible. In essence, this system instead of encouraging growth and development of employees, it tends to lose any motivation of an individual to move a higher category.
A widespread criticism of the forced ranking procedure is that it involves the making of subjective and speculative judgments. Appraisers are subject to influence by emotions and personal prejudices towards employees, and if the judgment is made based on these factors, the performance appraisal becomes inappropriate and inaccurate. There is a significant threat that the manager will ignore an employee’s actual performance but rather get influenced by emotions and such practices destroy the integrity of the system. Subjectivity also comes in from the fact that most appraisers do not have close relationships with the employees and therefore, it is challenging to make decisions on their work habits.
Strengths of an MBO system
MBO allows the employees to be active participants in the goal setting process and this improves an individual’s motivation and commitment to the goals. By achieving their personal goals, employees feel that they contribute to the attainment of corporate goals and this enhances commitment to performance. Individuals will meet regularly with their supervisors and receive feedback on one’s progress creates the feelings of enrichment and achievement (SHRM, 2014).
MBO results in more accurate appraisals compared to the forced ranking system. Every employee is appraised based on whether he or she achieved the performance targets developed at the beginning of the year. Less emphasis is put on subjective indicators such as behavior, personality, and traits but the employee is evaluated on the ability to achieve targets and get the job done. MBO is objective, future-oriented, and encourages for positive criticism where an employee can identify the reasons for poor performance and solutions formulated. Since the employees are directly involved in setting the goals, they are well aware of their evaluation areas, and this should act as a driving factor to meet the targets.
MBO improves organizational planning and coordination. The mindset of manager’s changes from activities and behaviors to results and all employees receive encouragement to set SMART goals. The participative nature of MBO makes corporate decision making easier, and all members focus their efforts on achieving common goals. Clarity in aims and objectives gives the organization a common sense of direction where everybody is aware of his or her roles. The corporate, team and individual goals are interlinked together making the coordination of activities easier.
Role of MBO in employee development and added employee value
By allowing people to set their performance goals with the help of supervisors, employees can own them because they feel they played a part in their formulation. Such employees show higher energy levels, greater commitment, and more focus because they are psychological involved in achieving the goals they formulated. During this process, employees identify their strengths and weaknesses, and they learn how to manage their limitations and leverage more on their strengths. Individuals also adopt a future-oriented mentality (Minchington & Estis, 2009) which improves their adaptability to change and enables them to come up with measures that show whether they are making any progress toward their goals.
Under the MBO performance appraisal system, employees can carry out a self-evaluation of their performance even evaluation is conducted by the manager (Slavic, Berber & Lekovic, 2014). The implication is that an individual can quickly determine whether the targets were met and if not met, reasons for the failure are identified, and remedial action proposed. Therefore, an added value is that a worker does not have to wait for the supervisor to determine whether the performance was satisfactory. Also, employees identify their strengths and weaknesses enabling them to develop their career plans which are presented to managers to start discussion an individual’s career prospects within a company.
Consequences of a suboptimal review
It is important to recognize that under the two systems, employees might still get a suboptimal review from their managers either as a result of managerial resistance to appraisal, lack of uniform standards, and the time-consuming nature of performance evaluations. The consequence of a suboptimal review is that some of the employees might quit because they view that the process is not fair. Also, relationships between the appraisers and workers are damaged resulting in a toxic work environment. An employee who continuously receives poor feedback gets demoralized, and his or her self-esteem is lowered reducing the motivation to achieve performance targets.
Estis, R. & Minchington, B. (2017). 6 Steps to an Employer Brand Strategy. ERE Media. Retrieved 19 February 2017, from https://www.eremedia.com/ere/6-steps-to-an-employer-brand-strategy/
Grote, R. C. (2005). Forced ranking: Making performance management work. Harvard Business Press.
Performance Management: How is management by objectives different from the widely used graphic rating scale?. (2017). SHRM. Retrieved 19 February 2017, from https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/managementbyobjectives.aspx
Slavić, A., Berber, N., & Leković, B. (2014). Performance management in international human resource management: evidence from the CEE region. Serbian Journal of Management, 9(1), 45-58
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