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Employee stack ranking - motivation or manipulation?

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Jessica Miller-Merrell, blogging4jobs

One of the most important responsibilities of an HR manager is to find the right way to motivate employees. On the surface this can seem like a simple task, one that can be checked off your list with a few compliments, maybe a bonus or even a promotion. But when you get in the trenches with these employees you wish to motivate, you’ll see that the day-to-day motivators for employees vary greatly from person to person, making it tricky to determine what type of system will best fit the employees who are a part of it and the organization as a whole.

Some companies have gone through this process and have come out on the other side, determining that the controversial system of stack ranking is right for them. Before we go any further, let me say that I’m neither for nor against stack ranking, but I do believe its success or failure depends entirely on the way it is implemented. On one hand, many companies that utilize stack ranking have extremely productive employees, but on the other hand, there are numerous ways it can go downhill quickly.

The case for motivation

When stack ranking gained popularity in the 1980s, it was seen as a way to consistently evaluate employees in a way that required less time from managers while also motivating and placing healthy pressure on employees to perform. In fact, thousands of companies have utilized this system, including GE, which was one of the first, Microsoft, though they recently abandoned it, Yahoo, Expedia and many more. Some of these companies have seen success while others would like to forget it was ever a part of their corporate culture.

One of the other appeals of stack ranking is the fact that it is quantifiable and in theory, requires no subjective analysis, though the process of raking in and of itself does leave room for much subjectivity. When based on numbers, such as the number of sales made, calls taken or money saved, it does offer a clear picture of performance and makes decisions easier when it comes time to promote or when necessary, lay off employees.

The case for manipulation

In theory, stack ranking can be a good thing, but when implemented, things often go awry. It is the unintended consequences of stack ranking that make it a risky venture. One of the most important is the way that some employees feel when they are assigned a ranking among their peers. The goal is that employees would be motivated to make it to the top but the fact is that many will never make it there, so it turns out to be demeaning. In fact, research has shown that there are typically a small number of superstars and a large number that performs below average. The middle ground, made up of the ones who could potentially work their way to the top, is virtually nonexistent, providing a false curve of performance levels.

Another consideration is how your employees react to pressure. History of using stack ranking has shown that employees often turn on each other and see their co-workers not as team members but as competitors. When this happens, things can get really ugly as you no longer have everyone pulling in one direction, the success of the group or organization, and instead have many people pulling in different directions, towards their own success. This is a form of manipulation as employees’ actions are driven by what is essentially a scoreboard of their contributions to the company versus everyone else’s.

Stack ranking trends

It is interesting that many large, successful companies have recently dropped the method while others are either continuing to use it or just recently adopted it.

Since the 1980s when stack ranking took off, it has seen ups and downs in use. Right now, it’s in a strange place where many companies are holding onto it because of the benefits mentioned above but the HR industry as a whole is revolutionizing how performance reviews are conducted and structured. Moving forward, I believe it will continue to see use but will have to experience modifications and change to keep up with the growing to demand for personal, human, productive performance ratings.

Do you think stack ranking motivates employees or manipulates them? Let us know in the comments section below.

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