Ranking vs. Rating Employees

Seems I’ve always been at odds with my friends in Human Resources…for one reason or the other.

One of the biggest philosophical differences we’ve had surrounded the “rating & ranking” of employees. This difference in mindset was present when I was with Citi, Lehman Brothers, First American (then CoreLogic after the spin-off) & finally, Nationwide.

In one way or another, all these companies used a “forced ranking” system whereby the top 10% of performers = “Exceptional”…the next 20% = “Outstanding”…the next 55% = “Average” (or “Meets Expectations”)…the next 10% = “Needs Improvement”…and finally, the last 5% = “Unsatisfactory”.

The “forced” part comes in where organizational levels…as low as a team &/or as high as a complete division…must ensure that there employees fit into these buckets.

If you have 20 people, then it’s 2…4…11…2…1

100 people? 10…20…55…10…5

To an extent, I’m fine with that.

Except if you have a unit, group, area, etc. that doesn’t fit nicely into the bell curve.

What happens to a unit of mostly “superstars”? Only 10% in the top “Exceptional” bucket & 20% in the next “Outstanding” bucket.

That’s 30% of your staff that are “above average”. But you have mostly superstars where it’s likely that 40%, 50% or even 60% of your team are “above average”!

A portion of them must be ranked as “Average”/“Meets Expectations”…even though their performance is actually Outstanding.

Let’s look at the corollary where you have an average unit, with very few superstars.

Yet 10% will get “Exceptional” & 20% “Outstanding”…even though some of that 20% are really “Average/Meets Expectations”.

But my real issue is that we use “adjectives” to describe their performance (that equates to a RATING, like you got in school), but we really put them in buckets on where they RANK with regard to other employees.

When you went to school, if you got an A, you got an A, regardless of how many other students got an A.

The teacher wasn’t limited to giving out only a certain % of As.

(Note: Pls don’t get me started on that idiotic “grading on a curve” nonsense! That was actually RANKING the students, but fitting them into RATINGS!)

The issue is using words & phrases like “outstanding”, “usually/often exceeds expectations”, etc. to describe an employee’s performance…but we’re NOT rating them (which uses descriptive words & defined statistical performance), we’re RANKING them (putting them into order).

You could be using words to describe an Average/Meets Expectations employee, but his performance was truly Outstanding…but you had too many superstars & there wasn’t enough room at the inn for him.

Or vice versa, a truly Average performer may get RANKED as Outstanding because the unit didn’t have 30% (10% Except + 20% Outst) of employee’s who were above average.

I always maintained that if you’re gonna use a RANKING system, then just say so.

“You’re in the top 10% of performers” & stay away from descriptive words. Don’t call them Exceptional; just call them “Top 10%”.

Yes, I fully understand that “You’re in the 5th to 15th percentile (out of 100)” may sound too harsh vs. “Needs Improvement”, but the truth is the truth.

And if you’re an employee in Team A (filled with superstars), you could very well be RANKED lower than someone in Team B (with only a couple of superstars) whose performance is actually worse than yours.

You know what they say about the company you keep. But it may actually work in reverse with a RANKING system.

The worse your peers, the better you’ll look.

Not sure if things have changed much in the past 6-7 years, but I doubt it.

Just some food for thought…

Thank you so much for listening!

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