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Comparing Co-Workers Against Each Other: Does This Motivate Employees?

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Question 1. What's your opinion regarding forced ranking performance appraisals? Do they motivate employees? Explain.

I believe forced ranking performance appraisals can be motivating for some employees and not motivating for others. Individuals with strong high-order needs who know that they will be ranked come appraisal time will strive and perform in order to achieve the highest rank possible. Other individuals with weak high-order needs might not strive for a high rank. I believe these individuals might even perform below their ability because of perceptions (i.e. "why should I work harder because so and so will get a higher rank than me anyway"). Even though I have consistently ranked high whenever evaluated under a forced ranked system in the past, I personally do not like forced ranked performance appraisals and believe they can cause an organization more harm and be less productive because of the system.

I served in the U.S. Navy from 1994 until 1999. During that time I was evaluated annually by my superior(s) in a quasi forced ranked performance appraisal system. At that time in the Navy there were three evaluation marks a sailor could receive: Promotable (average), Must Promote (above average) and Early Promote (Outstanding). The evaluation one would receive weighed heavily on the sailor's likelihood of being promoted to the next rank/pay grade at the next promotion cycle, which also occurred annually several months after the evaluations were given. At evaluation time the base was only permitted to give out 2 Early Promotes and 2 Must Promotes within a pay grade, regardless job title or duties. I happened to be the Security Department's training coordinator and lead instructor, a very high profile position that gave me the opportunity to stand out and be more visible to my superiors. At evaluation time I was compared and ranked with people who served as gate guards on the midnight shift, cooks in the galley, mechanics in the motor pool, etc. 3 out of the 4 evaluations I received while at this command were Early Promotes, the fourth was a Must Promote. Because of this I quickly "made rank" and was promoted at an accelerated pace, when compared to others. The other people in my pay grade saw this as unfair. I was witness to some of them "shutting down" and not performing to the best of their ability because in their mind they would/could not be evaluated any higher than Promotable (average). I also heard many of them say things like "why should I volunteer for extra duty, I'm not an Early Promote." I believe this ranking system and the perception held by many of the sailors of not being able to earn an outstanding performance review made the command less productive than it could have been.
Question 2. How would equity theory explain some employees' negative reactions to forced rankings? Explain.

Equity Theory - "A theory of motivation that examines how a person might respond to perceived discrepancies between her input/outcome ratio and that of a reference person" (Ivancevich, J., Konopaske, R., & Matteson, M. (2014). Organizational behavior and management (Tenth ed.). New York: McGraw-Hill, pg. 125).

Equity theory certainly explains the reactions of many of the sailors I've worked with in the example above. Some of the sailors would change their amount of input. Many sailors simply decided to put in less effort because they perceived they could not receive anything other than an average evaluation. By giving less of an effort they were dooming themselves to another average evaluation come next year.

Question 3. Based on Chapter 5, if you decided not to use forced rankings at your company, how would you motivate employees?

The last company I worked for did not use forced rankings. We evaluated our personnel on an individual basis and we did not limit the number of outstanding evaluations that could be given out. An Average review would earn an employee a 2% raise (2% of their current salary), a Very Good review earned 3% and an Outstanding review earned 4%. This annual review and raise structure was published in the employee handbook, so each employee was aware that the amount of raise they could expect is solely based on their individual performance. Each employee had the capacity to perform, it was our job as managers to hire and train people with the skills required to do a job. They had the opportunity to perform, again our job as managers to keep the business running successfully so the employees had jobs to go to. Now the fate of each employees' future earnings was in their own hands, did they have the willingness to perform and how willing were they to be outstanding.

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