Employee review techniques yield increased productivity: Part 1

As workplace productivity increases, the need for ever greater management skills to both maintain and further enhance human capital’s contribution to organizational success.

Rank and Yank Methods: What it is and isn’t

Recently Microsoft announced that it will be changing its performance appraisal system, rethinking the “Rank and Yank” differentiation tool. Differentiation isn’t about corporate plots, secrecy or purges, but rather a method focusing on building great teams. “Rank and yank” is a system of rating employees to identify the top 20 percent, the middle 70 percent and the underperforming 10 percent. Most critics of this method see it as a way to identify their worst performers and let the bottom 10 percent go. Some managers have even been accused of hiring weak candidates to protect current employees. On occasion, managers were hiring someone in September, so as to be a fall person.

Differentiation is difficult to do correctly and it takes focus and effort on the part of the managers. When exercised correctly, this review process will develop future leaders, instill employee dignity and create winning companies. Employees are reviewed to increase productivity and to reveal how the expectations of the company are being embraced and expressed. Communication of company values and the desired employee style of performance are key. More importantly, differentiation should not stifle innovation.

The right way

Differentiation is about performance and candid reviews to better align performance with organization’s mission and values. Candor is essential and it requires trained managers to do the reviews. Differentiation allows employees to know where they stand and should start with communication of mission, what the company hopes to achieve. Some would ask: does differentiation destroy teamwork or enhance it? Answer – if is it an organizational value? Build it in and be sure that all employees understand the importance of working in a team environment.

How

While communication of company values is important, it requires a subjective evaluation. More quantitative measures such as output and impacts need to be included along with organizational-enhancing behaviors. When an employee embraces company values, their behavior helps achieve the mission. Findings indicate significant relationships between employee job satisfaction, organizational commitment and intention to quit. Reducing employee turnover both reduces costs and increases productivity. Taking into account both the direct and indirect costs of employee turnover, the minimum costs equate to 1-year’s pay and benefits. Job satisfaction is more focused on the individual’s response to the job or to specific aspects of the job, such as pay, supervision and working conditions. To read more about using differentiation to keep your employees satisfied, read Part 2 of this series from Michigan State University Extension.

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