In this assignment you will be examining two common performance appraisal methods: forced ranking (also called forced distribution) and management by objectives (MBO).

Forced Ranking

The forced ranking system is used by many organizations to differentiate employees based on job performance. Managers are in charge of ranking the top 20 percent (A Players), the vital 70 percent (B Players), and the bottom 10 percent (C Players). In most organizations, the vital 70 percent of employees are crucial to the organization's success because the top 20 percent may be overqualified and may consider leaving the organization if a better opportunity arises, and the bottom 10 percent of employees can easily be trained or managed out. Thus, it is the vital 70 percent of employees who are loyal to the organization and depend on the organization for job security and stability.

To determine who the A Players are (top 20 percent), a company may look for the employees who have "very high energy levels, the ability to energize others around common goals, the edge to make yes-and-no decisions, and finally the ability to consistently execute and deliver on their promises" (Welch, 2001, p. 151). When using specific criteria to evaluate an employee, it becomes imperative to be aware of the "halo effect." The halo effect occurs when the rater allows a rating from one dimension to influence the rating on other dimensions. The forced ranking system puts pressure on the employees to compete with one another and managers to be as unbiased as possible. The image below provides an example of the forced ranking bell curve.

Forced Ranking Bell Curve

Management by Objectives:

Management by Objectives (MBO) is a management philosophy that assesses an employee's overall performance (results) on predetermined goals. When determining the specific goals, a manager and employee will meet to review the organization's goals and determine employee goals that are specific, measurable, attainable, realistic, and timely (SMART). The goals or objectives are meant to be both challenging and motivating. An example of a personal SMART goal is: By December 31, 2015, I will position myself for a minimum pay raise of 5% by reducing the department's budget by 10% but increasing its sales by at least 10%.

This goal can easily be tracked because it is specific, measurable, attainable, realistic, and timely. It is important to mention that personal and organizational goals need to be SMART. During the review period, progress toward specific goals is monitored by the supervisor. Employees who work for the same department or unit may have several target goals that are similar and several target goals that are specific to each employee. (This management philosophy is not the best method to compare employees.)
Reference: Welch, J.F. (2001). Jack: Straight from the gut. New York: Warner Books Inc.

Assignment Instructions

In this assignment, you will act as the VP of HR for a private-sector organization of your choice. After conducting research, write a 10-minute speech to be presented in the future to your local Society for Human Resource Management (SHRM) group.

Your speech will persuade the audience to discontinue their use of a forced ranking system and replace it with a management by objectives system. Make a persuasive presentation.

Known for being creative and intelligent, you will explain in your speech the drawbacks of a forced ranking performance appraisal system.

Also discuss the strengths of an MBO system and show how MBO could help an employee develop. Also discuss what the added value might be for each employee under an MBO appraisal plan. Also discuss what the consequences of a suboptimal review received might be under both systems.

Drawing on the material in the background reading and your own additional research, prepare a 10-minute speech as described above using at least 4 library sources to help strengthen your presentation.

Assignment Expectations

Demonstrate critical thinking and analysis of the relevant issues and HRM actions, drawing on your background reading and research.

Show your ability to synthesize information and submit a concise and meaningful written speech.

Information Literacy: Evaluate resources and select only library/Web-based resources that provide reliable, substantiated information to utilize to prepare your speech.

Give authors credit for their work. Cite sources of borrowed information, preferably in APA style.

Proofread carefully for grammar, spelling, and word-usage errors.

Required Reading

Stewart, S., Gruys, M., & Storm, M. (2010). Forced distribution performance evaluation systems: Advantages, disadvantages and keys to implementation. Journal of Management & Organization. 16:168-179. Retrieved from

http://www.timothy-judge.com/documents/StewartGruysandStorm2010_000.pdf

Hazels, B., & Sasse, C. M. (2008). Forced ranking: A review. SAM Advanced Management Journal, 73(2), 35?39.