Recognize This! – Creating a big winners’ circle is as important in performance management as in incentives, or unintended consequences will likely result.

In the last couple of weeks, countless news sources and bloggers have taken a swipe at Microsoft for their forced ranking system and a Vanity Fair article calling it “the most destructive process inside Microsoft.”

Now, readers of my blog know I’m no fan of forced ranking systems, having heard too many first-hand stories of the internal problems it can cause.

In this latest imbroglio, most of what I’ve read one way or another talks about the last sentence in this quote from the Vanity Fair article:

Quotation

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,” says a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”

I’m more interested in the first part of that sentence. That description of how forced ranking performance management systems work is also one of the best I’ve seen on how incentives work. From day one, you know just how many “winners” you can have. And no matter how good any of the rest of the people are, once those “winners” are identified, you’ll never enter the winner’s circle.

Fundamentally, that’s not any different than a traditional incentives program set up in a call center, for example, in which employees are told, “The two people who close the most calls in X number of hours will win the prize.” Yes, but what about the next three people who didn’t close as many calls but did create strong, lasting, positive customer relationships in the calls they did close but spent a little more time on.

Once again, it’s the law of unintended consequences at work. It’s no less true in the outcomes of forced ranking in performance management. Once again, quoting from the Vanity Fair article:

Quotation

“This caused people to resist helping one another. It wasn’t just that helping a colleague took time away from someone’s own work. The forced curve meant that ‘Helping your fellow worker become more productive can actually hurt your chances of getting a higher bonus.’”

Think carefully about how you’re directing the focus of your employees. Far better to broaden the winners circle so all have the opportunity to participate and focus them instead on what really matters most – every employee living out your core company values as they work to achieve your strategic objectives.

What unintended consequences have you seen from forced ranking performance management systems?