Camille Copeland
MGMT 631: Management & Organization Behavior
Case 5.1
3/19/2015

The case begins by stating “rigid rankings hinder the teamwork and risk-taking necessary for innovation (Ivancevich, Konopaske, Matteson, 2011).” That being said many companies used the described ranking systems to evaluate their employees, putting them against each other and some even lead to firing of low performers. A performance review is supposed to be a time to reflect on how an employee has or has not fulfilled the expectations of the manager and the individual goals that were set. In this case analysis, the technique of rank of employees by General electrical (G.E.) and Yahoo! are looked at. Both companies have used ranking scales and are now looking for a more innovative style to rank employees but still foster a motivational atmosphere. In the past, G.E. has used a 20/70/10 split (top 20 percent, the middle 70 percent, and the low-performing 10 percent) which required managers to place employees into one of the three groups hence comparing employees against one another (Ivancevich, Konopaske, Matteson, 2011). The managers rank employees against each other and then use the ranking to determine who receives a raise, bonus, promotions, and sometimes who gets fired. Forced ranking allows the top-ranked employees to be rewarded for their hard work. Yahoo! used a similar ranking system but compared employees against a standard, not against each other (Ivancevich et al., 2011). The importance of rank is what determines any extra compensation that the employee receives. A study done by Steve Scullen, an associate professor at Drake University found that forced ranking systems, including firing the bottom 5-10% results in an increase of productivity by 16% over the first couples years, but later drop off to zero by year 10. Forced rankings are a quick fix, and other group ranking evaluations also kill morale, “there’s no magic process (Ivancevich, Konopaske, Matteson, 2011).”
Q1.
In my opinion, a forced ranking performance system is an effective way to judge production, but not effective whereas a rookie employee will be compared against a veteran employee, and if a low grade is earned, terrible for morale and employee production. The veteran will have more experience with the company; the rookie employee is no match, has more of an ability to outperform. I can see why people are against this method, saying that it kills the morale and that it creates a cut throat environment that doesn’t involve teamwork. But overall it can motivate a person to work harder and to make sure they aren’t in the bottom percentage in the ratio. The force-ranking system also affects motivation through perceived unfairness in the system.
Q2.
The equity theory focuses on employees being treated fairly in a work environment. This theory shows how employees react to the forced ranking method. This theory contends, “Motivation is based on the assumption that individuals are motivated by a desire to be equitably treated at work (Ivancevich, Konopaske, Matteson, 2011).” The higher an individual's perception of equity, the more motivated they will be and vice versa: if someone perceives an unfair environment, they will be de-motivated. People fill that the ranking method violates employees’ rights. Causing some lawsuits and accusing the employer of discrimination. The equity theory really shows how losing a promotion and/or raise really affects the employee motivation and commitment to the corporation. The theory would explain some employee’s negative reactions to forced rankings system because the employee will begin to feel their work is not sufficient, depending on how they are graded. If a low grade is earned, then they are less likely to receive any raises or promotions, at this point their motivation and productivity are effected. The easiest way to see the equity theory at work, and probably the most common way it does impact employees, is when colleagues compare the work they do to someone else that gets paid more than them. Equity theory is at play anytime employees say things like, “John gets paid a lot more than me, but doesn't do nearly as much work,” or “I get paid a lot less than Jane, but this place couldn't operate without me!” In each of those statements, someone is comparing their own effort-to-compensation ratio to someone else's and is losing motivation in the process.
Q3.
People are the main and the most important resource of each company. For achieving great results each leader needs to have a motivation strategy to create and maintain the spirit of enthusiasm among employees. I would practice the following ways to motivate my employees: 1) Share the Organizational Vision With Each Member: If everyone is aware of the collective vision, which will lead to prosperity and success of each team member, 2) Offer Pay Incentives for Meeting Performance Standards: celebrate every accomplishment, sales goals, attendance, etc. with extra compensation 3) Encourage Creativity: encourage staff to think outside the box, displays leadership, ownership, adds to the company, limits boredom. 4) Offer Growth Opportunities: If people know that everything is going to be the same way all the time, they will definitely lose the motivation to put their maximum efforts in work. They should be sure that the devotion and hard work will lead to new personal and professional achievements.

References:
John M Ivancevich, Robert Konopaske & Michael T Matteson. Organizational Behavior and Management, 9th Edition. McGraw Hill. 2011
Kostanyan, A. (2014, September 22). 15 Effective Ways to Motivate Your Team. Retrieved March 19, 2015, from http://www.huffingtonpost.com/anush-kostanyan/15-effective-ways-to-moti_b_5854242.html