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GE super executive Jack Welch was a firm believer in ranking employees and annually eliminating the bottom 10%. We agree with Welch that there should be no hiding from performance. Ranking and rating workers makes sense, provided that you meet these conditions:
- Get the data needed to identify good performance. This is easy in sales, but more difficult in administration.
- Make the data available in a format that allows managers to understand and use it.
- Have a dialogue with employees, setting forth expected performance benchmarks. Ask yourself, “How would an employee know if they were doing well or poorly without having to ask me or without my having to tell them?” If they can answer that question, you’ve defined your performance benchmarks clearly.
- Prepare draft guidelines for ranking and rating and then hold a townhouse meeting where employees can express their concerns about it. Consider answering some of their fears in advance with Frequently Asked Questions (FAQs) that might answer such inquiries as:
- How does our performance affect the ranking?
- How do we know if the rankings are accurate?
- What do the rankings mean for our pay?
- What if we disagree with a ranking?
- What if we feel that our contributions to the company aren’t presented accurately in the ranking guidelines?
- What will you do with good performers — and poor ones?
- Who gets to see the list? The answer should be only those in the company with a need to know. It might not be a good idea to share the rankings and ratings from different departments; the more open your environment, the more sharing that can go on.
Acknowledge that there will be some fears on all sides. Identify and address them up front. If you’re acting with integrity, the only fear that should remain is that of non-performance.
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