- Description
MGT 312T Wk 3 – Apply: Employee Performance and Operations
Monitoring Performance Through Goal Measurement
Performance management doesn’t stop once effective goals are set for employees. Monitoring performance is an important next step to monitoring progress toward achievement of those goals—and accurate measurement of progress is critical. This activity is important because managers can use information gathered during performance monitoring to identify problems with and find opportunities to enhance employee performance.
The goal of this activity is for you to develop your knowledge of monitoring performance by matching measures of goal progress with their descriptions.
Read the descriptions of measures of goal progress. Match each type of measure to the appropriate description.
- Timeliness
- Quantity
- Financial metrics
- Quality
Garbage… Not Just the Work but the Outcomes Too
In an effort to cut costs, Albuquerque city officials decided to stop paying their garbage collectors for working overtime. This decision had a noticeable impact on the quality of their performance. This exercise is important because managers must consider how decisions about the financial health of a company can impact the quality of performance among its employees.
The goal of this exercise is to draw the connection between consequences and performance outcomes.
Read the case about trash collection crews in Albuquerque getting paid for only eight hours of work, then using the 3-step problem-solving approach, answer the questions that follow.
City officials in Albuquerque, New Mexico, needed to cut costs. Among the targets they identified was overtime pay of trash collectors. The officials decided to pay trash collection crews for eight hours of work no matter how long it actually took them to finish their routes. The hope was that the crews would work more efficiently and quickly, given that they could then go home early and still get paid for eight hours of work.
This PM practice seemed like a success, and overtime costs dropped significantly. However, unintended consequences emerged. Crews overloaded their trucks to reduce the time they spent going to the dump, but strict weight limits resulted in fines when they arrived. So they drove faster, which resulted in more tickets and accidents. Sometimes they skipped trash pickups and truck maintenance, which generated customer complaints and more frequent vehicle breakdowns.1
Apply the 3-Step Problem Solving Approach
Step 1: Define the problem city officials wanted to fix.
Step 2: Identify the potential causes of this problem. (Consider also the common reasons rewards fail to motivate.)
Step 3: Make your recommendations.
Footnote
- Pfeffer, “Wean Us from Incentive Myths,” The Washington Post, March 22, 2009:
What is the key problem in this mini-case?
Multiple Choice
- Employee productivity
- Increase in accidents involving trash collecting trucks
- Low quality performance by trash collectors
- Customer complaints about trash collectors
- The need to increase overtime pay from its current levels
If city officials considered the elimination of overtime as a reward—meaning trash collectors could go home early if they finished their work, yet still get paid for eight hours—then, why did it fail to motivate the desired behaviors?
Multiple Choice
- The reward had a short-lived motivational impact
- The practices focused only on monetary rewards
- There was a long delay between the performance and when the reward was provided
- The trash collectors seemed entitled
- The reward seemed to be one-size-fits-all
What is one way city officials could have had more success in achieving their cost-cutting goals?
Multiple Choice
- Quickly terminating trash collectors who were exhibiting counterproductive behavior
- Allowing for overtime pay to continue
- Reducing the number of pickups for drivers
- Including the trash collectors in the process of designing the cost-saving program
- • Upgrading trash trucks
Why Are Some Companies Yanking Forced-Ranking?
Forced ranking is a popular performance management tool for many well-known companies such as Ford Motor Company, 3M, and Intel. For decades, forced-ranking appraisal practices have helped organizations and their managers differentiate among high- to low-performing employees. This exercise is important because it shows how organizations decide to recognize and reward top performers and determine grounds for terminating low performers.
The goal of this exercise is to demonstrate the advantages and disadvantages of forced-ranking systems.
Read the case about the Adobe’s performance-management practices. Then using the 3-step problem-solving approach, answer the questions that follow.
Money is an important tool for both attracting and motivating talent. If you owned a company or were its CEO, you would likely agree and choose performance management practices to deliver such outcomes. You would probably also favor rewarding high performers and having an effective means for removing low performers. For decades, forced-ranking appraisal practices have helped organizations and their managers differentiate employee performance and achieve both objectives—rewarding top performers and providing grounds for terminating the low performers.
Broad Appeal
These qualities made forced ranking (also known as forced distribution or “rank and yank”) a popular performance management tool for many marquee companies, such as Ford Motor Company, 3M, and Intel. GE, for instance, made the approach famous using its “vitality curve” to rate employees into three categories—top 20 percent, middle 70 percent, and bottom 10 percent. The top often received raises two to three times greater than the next group, while the bottom group was often put on probation or fired.1 Microsoft also used forced distribution to ensure it was always raising the bar on talent and performance. It replaced its lowest-performing employees with the best in the market and ensured there was always more exciting work than it had people to do it.2
One argument in support of forced ranking is increased accountability. It requires managers to do the difficult work of differentiating performance. While nobody likes to be the bearer of bad news, not confronting performance issues is an underlying cause of score inflation (grade inflation in school) and mediocrity. The implication is that not everybody can be a top performer, and it is management’s job to know and acknowledge the differences. Forced ranking also can be used to remove “dead wood.” Employees who aren’t as driven, capable, or competitive are driven out and replaced with those who are.3
Another central supportive argument is that resources are constrained, notably people and money. Culling the workforce based on performance is a way to be sure your best employees are able to work on the company’s most important and valuable projects, products, and services. And it allows companies not only to allocate more to their best employees, but also to create clear and often substantial differences between different levels of performance and associated rewards.
This All Makes Sense, But Why Are Many Company’s Yanking the Practice?
Performance management practices have compounded the challenges faced by Yahoo and Amazon. According to a spokesperson at Yahoo, the company’s program—quarterly performance review (QPR) recommended by McKinsey Consulting—is intended to “allow for high performers to engage in increasingly larger opportunities at our company, as well as for low performers to be transitioned out.”4 However, problems arose when managers and employees accused the company of using it to fire employees “for performance” instead of laying them off. The scale of this issue is substantial, given that nearly one-third of the company’s workforce left or was terminated in 2015-2016, though the law requires at least 30 days’ notice for mass layoffs.5 Similar practices also were linked to discriminatory dismissals at Ford, Goodyear, and Capital One and caused them to change their practices.6
Amazon has embraced forced ranking to foster internal competition and drive employees to always improve. Its organizational-level review (OLR) process requires managers to select which employees to support and which to “sacrifice” (not all employees can pass). Even after an incredibly rigorous hiring process intended to select the best of the best, employees are distributed into high, average, and low performers—20, 60, and 20 percent, respectively. This means 80 percent of the company’s employees have stopped being stars by the time of their first performance review. The process is challenging for managers too, who must continually select talented subordinates to fire at every performance review.7
Rank and Yank at Adobe
Another company that championed forced ranking was Adobe. It had a rigorous, complex, technology-driven process for ranking its employees each year. Performance expectations were set and performance was measured, documented, reviewed, and rewarded. The goals were to help the company improve employee performance and ensure it had the best talent. However, what the company actually achieved was quite different.
Adobe calculated that its process of reviewing its 13,000 employees required approximately 80,000 hours from its 2,000 managers each January and February. This massive time commitment actually reduced employee performance, because this time wasn’t being spent on productive work like developing products or cultivating and serving customers. And while the system was meant to ensure manager accountability, it actually allowed many to avoid confronting low performers until the annual review. This meant low performers were terminated only once a year.
Donna Morris, Adobe’s global senior vice president of people and places, described the PM flaws this way: “Especially troublesome was that the company’s ‘rank and yank’ system, which forced managers to identify and fire their least productive team members, caused so much infighting and resentment that, each year, it was making some of the software maker’s best people flee to competitors.”8 Moreover, the performance management practices did not align with the goals of employee growth and team work, both fundamental to Adobe’s success. It instead focused on past performance and compared employees to each other.
The shortcomings of the process were underscored by internal “employee surveys that revealed employees felt less inspired and motivated afterwards—and turnover increased.”9 This last point compounded problems by causing the wrong employees—the high-performing ones—to quit.
Assume you are Donna Morris, Adobe’s global senior vice president of people and places. How does the information in the case inform your recommendations about PM practices at Adobe?
Based on the case, which of the following is a problem with forced-ranking?
Multiple Choice
- It discriminates among employees based on performance.
- It forces managers to have difficult conversations.
- It allows for low performers to be fired at an increased rate.
- It contributes to a rigorous hiring process.
- It causes infighting and resentment among employees.
Which step in an effective performance management system would forced-ranking be a part of?
Multiple Choice
- Set benchmarks
- Setting goals
- Monitor and evaluate performance
- Provide consequences
- Define performance
Which of the following is NOT an advantage of forced-ranking?
Multiple Choice
- Identifies employees who are not driven, capable or competitive
- Allows the best employees to work on most important projects
- Allows for an objective rating system
- Increased manager accountability
- Saves managers time
What do you recommend Adobe do to improve its performance management practices?
Multiple Choice
- Ensure that the performance management practices focus on employee growth
- Ensure that the performance management practices focus on employees’ past performance
- Encourage managers to have annual reviews for their teams
- Be sure employees know they are constantly compared to one another
- Commit more manpower to reviewing performance reports
Adobe’s performance management practices fall under which area of the organizing framework?
Multiple Choice
- Individual-level outcomes
- Individual-level processes
- Person factors inputs
- Organizational-level outcomes
- Situation factor inputs
iSeeIt! Animated Video: Contingent Consequences
When it comes to motivating employees, managers often times try and bring about a certain target behavior by offering specific consequences to employees. This concept is also known as reinforcement theory, and is widely used in today’s workplace. This theory includes providing employees with certain positive and negative consequences in order to spur desired behavior.
After reviewing the animated video on contingent consequences, please respond to the following questions.
Shawn is required to be in the office Monday through Friday, but would really value the ability to work from home one day a week. Based on Shawn’s above-average performance last year, his boss is allowing him to work from home on Fridays. This is an example of which of the following?
Multiple Choice
- Positive reinforcement
- Equity
- Punishment
- Extinction
- Negative reinforcement
Reducing an employee’s compensation because of poor performance is known as negative reinforcement.
Melissa is an engineer at Acme Consulting. She used to work from 8:30am to 5:30pm, but her boss told her she could come in at 9am because of her great performance last year. However, this year Melissa is constantly arriving late to work. Her supervisor is looking to utilize extinction to remedy this behavior. Which of the following would be an example of extinction in this situation?
Multiple Choice
- Providing Melissa with additional compensation if she arrives to work by 9am
- Firing Melissa
- Having Melissa attend leadership training
- Having Melissa go back to working from 8:30am to 5:30pm
- Reducing Melissa’s compensation