For a company full of people climbing over themselves to push AI ideas - I have a challenge for you. Ask AI what the actual impact of forced low ratings in a major company. Not to steal the thunder here but - it’s a total failure - across the board!
It brings -
Terrible supervisor behavior
Crushes morale
Encourages disposable practices
Invites lawsuits
Extreme cost from turnover
Moreover - these impacts are worse at a company like P66 because of the annual cycles of cuts, the layoffs, outsourcing, and automation.
What’s so bad about it? Consider this situation:
You are in a group of 60 people, no supervisor has more than 6 people, some have only 3. Because of the continuous cutting of the “worst” since 2012 and the outsourcing or automation of many entry level jobs - your group is comprised of seasoned professionals. You supervise 4 people, all improve their work processes, find opportunities and add value. Through the year you stretch your people and have challenging targets. Almost all are hit. And - this is a big one - you have no reason for substantive performance conversations through the year.
At year end, as you “calibrate” you are asked for your bottom performer. You choose the person who missed 1 of his stretch goals - knowing that this person had a great year, they just happened to be at the bottom of your group. You know they don’t deserve a “3”.
Through calibration, your group of 60 must have three people to hang “3”’s on. Last year, you had 2 people in the larger group who were very deserving of “3l ratings and one more that made sense - they all left the company. Now, as calibration moves on, you realize that your employee is in the running for bottom 5 of the group.
Let’s pause here - because this whole process is built on the idea that each supervisor is as good, as active, as honest as the next. Surely each supervisor is as diligent in giving stretch goals to their employees - right? Surely none of them have employees who do the minimum but don’t mess up - thereby flying under the radar?
Back to calibration. At the end of the session, all of your peers and your people leader agree that your person is the third “3”. Now, after a successful year, you get to tell them they underperformed and are going to have negative impacts to their compensation as well as be put on a performance improvement plan.
This, in various forms, is what forced ratings look like. In every instance you must assume that people who did not earn a 3 will get them. And when that message is given - what will the supervisor say?
An honest comment would be “I believe you did a great job, however, in calibration the group determined you to be in the bottom 5%.” And what would you tell him to work on, exactly?
HR will say you need to “own the rating” and you cannot say they don’t deserve it - but pull all that apart for a moment. Your true feelings, the ones you expressed at calibration, is that this employee does not deserve a 3.
This process cannot exist at a company that claims to care about employees.
Impact
The forced 3 should motivate this employee to look for a job. There is a high probability the supervisor may also be more open to leaving - having seen the true character of our policy. If they leave, how do you know we get someone better, and, when? Many studies show that turnover costs as much as 1 year compensation! Seems pretty short sighted.
Add to this that we don’t have good pipelines for development unless you are hiring from CapGemni!
Legal risk
Why is there legal risk? Because we are rating people low not because of their actions. In many cases, there will have been no negative feedback in the year from the supervisor. When this occurs, especially against a protected class - bad things happen. Use AI to see how many companies have been sued for this practice and how many have stopped because of litigation threat - it’s a lot.
This is a terrible idea - a horrible idea - and it impacts all but the highest level employees.
My hope is that a rigid core of supervisors will ask themselves honestly if each person who is hung with a 3 deserves it. If they do, they should have been given ample notice through meaningful conversations which are documented. If, however, you are a supervisor who is tasked with hanging a 3 on an employee you know does not deserve it - my hope is you say NO, and you inform management you would rather have it assigned to yourself as neither of you have earned it