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Why I Hate Forced Distribution

January 14, 2012

January is a month that many supervisors hate. Coming off one or two weeks wonderfully relaxing holiday vacation immediately into the dreaded task of rating employees, is enough to increase the anti-depressant sales of any CVS. The reason for this stomach-churning month isn’t the basic task of rating employees—most experienced managers know how to do this very well—it’s the forced distribution

This is not right. And this has nothing to do with pay treatment. Everyone understands there are limited funds for bonus pay, especially these days, and only the best of the best typically get these few dollars. In many conversations with employees (and studies bear this out) most don’t care as much about the bonus as they do about the performance rating. When an employee establishes goals at the beginning of the year, works hard all year, and exceeds the goals, they should be rated on their annual appraisal accordingly. Regardless of whether 10, 20, 30 or 50% of their peers did likewise. To do anything else is demoralizing (and studies prove this as well) and, to my mind, unethical.many must deal with, causing the annual fight for placing more employees in the ‘exceeds’ category than are ‘allotted.’

A number of Human Resources Web sites cite these additional disadvantages to forced distribution programs:

• They increase unhealthy cut-throat competitiveness;
• They discourage collaboration and teamwork;
• They harm morale;
• They are legally suspect giving rise to age discrimination cases.

Ann Bares in her blog on Workforce Management posted on this topic back in 2008. She quoted from Ed Lawler‘s book Treat People Right:

I believe that the forced distribution approach is a bureaucratic solution to a serious leadership failure.  It ignores the reality that in some work groups there are no poor performers and in others there are no good performers.  It causes managers to disown the appraisal event and to essentially say, “I was just following the rules.”  Finally, it leads to a kind of unfair and unreasonable treatment of employees that moves the organization signficantly away from a virtuous spiral environment toward one that fosters survival of the most political or luckiest.  It also can lead to lawsuits because it can be considered unfair to whomever ends up in the lowest-rated group.  After lawsuits were brought against Ford and Goodyear on this charge, both companies abandoned their forced distribution systems.

Given these problems, why do companies use the forced distribution approach?  The answer is simple but not particularly flattering to many managers.  It represents an easy answer to solving a classic problem:  rating inflation.  Just as in universities where professors tend to give high grades to everyone, many managers find it easier to be generous with high ratings, and as a result, many organizations suffer from top-heavy performance appraisal scores.

Because it is a leadership problem, the best solution rests in creating effective leadership rather than the top-down bureaucratic mandate of a forced distribution system.  Mandating a certain distribution is a second leadership failure that just compounds the problem.

There are many more resources that stress the disadvantages of this practice far outweigh the advantages–and the debate is not new.  Yet the folly of forced rankings continues in many corporations. It’s time they emerge from the Jack Welch’s curse and implement a more appropriate strategy.

I am happy to say here that I love my company. I love the people I work for, with, and who work for me. I love that fact that we truly do care about our employees in many wonderful ways. I am also glad that, for the first year in my career, our performance policy clearly states that we do not use forced distribution with regard to performance ratings. This is a very good thing and I am looking forward to seeing the good fruit from this change.

UPDATE: Pleased to say distribution of performance ratings was NOT forced this year. This makes me very happy. Managers’ ability to distribute allocated bonus budget how we like without being portfolio managed, now that’s another story… :-p

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