Employees are more concerned with how they look on paper, rather than what they can do to improve processes and better contribute to the organization. With stack ranking employees, performance management becomes a fight for numbers, rather than focusing on vital feedback to improve performance. Effective performance management rewards good performance to encourage accomplishment and growth. Performance management is meant to involve employees and improve organizational effectiveness to accomplish organizational goals. Employees may become suspicious of one another, which could discourage innovation for the company as a whole. Communication levels decrease, keeping vital information in small circles in order to be a step ahead of the next guy. There is no more cooperation among team members, which can cause a tooth and nail fight to the top. It creates unhealthy competition among employees and they lose trust in one another, with an ‘every man for himself’ attitude. When companies use stack ranking to manage employee performance, the idea of team work goes right out the window. In order to have a successful team, there must be trust, cooperation, and communication. A team that works together and builds on individual strengths can prove to be very beneficial to any company’s objectives. Team work is a fundamental aspect of any organization. It is detrimental to team work and team dynamics, it turns performance management into a fight for ratings, and encourages dishonesty in reporting. There have been articles published from sources such as Business Week and studies done by Walden University claiming that the stack ranking of employees is actually devastating to employee performance and to the company as a whole. Since it is so widely used it must be effective right? Wrong! Today, stack ranking is the fourth most commonly used appraisal technique in 75% of U.S companies that use the performance appraisal programs behind scaled ratings, narrative assessments, and the 360 degree appraisal. Companies often release the bottom 10% of employees in order to keep the best talent in their firms. The idea was to rank employees on a scale of high performers (20%), middle (70%) and low performers (10%). “Stack Ranking Employees” was an idea created in the 1980’s by General Electric to weed out poor performers.
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