Is it helpful or harmful to rank your workers?
Opinions are sharply divided about issues such as 360º feedback programs, performance measurement, performance reviews, forced ranking, etc. Here is Deanna Hartley’s response to the question, featured in Talent Management magazine (November 2010).
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A recent study challenges the commonly held notion that ranking employees – essentially comparing their performance to that of their peers – works well as a motivational tool and suggests that it can actually backfire on managers.
It’s oftentimes thought that rankings can enable a workforce to become more competitive, causing high performers to work harder to maintain their rankings and those with lower rankings to put in the extra effort to try to catch up with their colleagues.
What can end up happening, however, is quite the opposite, according to the study – titled “Rankings and Social Tournaments: Evidence from a Field Experiment” and conducted by Iwan Barankay, a management professor at Wharton.
The research finds that rankings could in fact result in high performers becoming complacent about their work and those with less-than-stellar ranks becoming discouraged and essentially giving up.
It does seem obvious to me that in certain cases, these type of benchmarking tools have the potential to lower morale, cause resentment and, in the worst case, prompt some to sabotage their co-workers’ efforts – none of which is helpful to an organization’s bottom line.
Then again, if employees were blissfully unaware of how their work compares with others, there may not be as much of an incentive to put in the blood, sweat and tears.
The solution seems to lie in one of Barankay’s quotes in a Knowledge@Wharton article: “A good employer knows its employees very well and should have a good idea how they will respond to the prospect of being ranked … If, as the employer, you think a worker will respond positively to a ranking and feel inspired to work harder, then by all means do it. But it’s imperative to think about it on an individual level.”
Interview: Stewart D. Friedman
Currently Friedman is a Practice Professor of Management at the Wharton School of the University of Pennsylvania. Friedman is founder and director of Wharton’s Work/Life Integration Project and he founded Wharton’s Leadership Programs for both the MBA and Undergraduate divisions. Friedman was director of academic affairs for Wharton’s undergraduate division and has won numerous teaching awards; The New York Times cited the “rock star adoration” he inspires in his students. From 1999 to 2001 he was a senior executive at Ford Motor, where he was responsible for the company’s global leadership development strategy and programs. He was an advisor to Vice President Al Gore and Jack Welch on work/life issues and was chosen by Working Mother as one America’s 25 most influential men in having made things better for working parents. Friedman earned a BA degree at the State University of New York at Binghamton and MA and PhD degrees at the University of Michigan. His most recent work is Total Leadership: Be a Better Leader, Have a Richer Life, published by Harvard Business Press – an award-winning book that reached #3 on USA Today’s national bestseller list. He heads a group that brings Total Leadership to organizations and communities worldwide in order to improve performance in all parts of life – work, home, community, and self – by finding mutual value among them.
Morris: In your opinion, what have been the most significant changes that have occurred in the U.S. workplace during the past decade?
Friedman: The world has changed dramatically since I began teaching at Wharton in 1984, and incredibly fast in the past decade, with profound impact on every aspect of business life. The changes demand a new approach to business. Perhaps the most significant shift has been the digital revolution and how this has altered every aspect of our lives, especially work. Ours is the first generation in history, for example, for whom the decision about when to work and when to rest is – at least for many of us – an internal one rather than a reaction to the relationship of the earth to the sun. Like all technological revolutions, the arrival of such tools precedes our capacities to use them intelligently. Right now we’re in the midst of a grand experiment on how best to harness the incredible power of the internet while we struggle to maintain useful boundaries among the different parts of our lives.
Morris: Given your response to the previous question, what impact have these changes had on workers’ efforts to balance career and personal obligations?
Friedman: Managing the boundaries between work and the rest of our lives – family, community, and the private self (mind, body, and spirit) – is now a much more daunting task. The good news is that there are ways to realize the promise of greater focus and presence on the moment for better performance and results, but it does take discipline and practice to get there.
Morris: Especially within the last few years, there has been a great deal attention devoted to employee engagement or the lack thereof. Recent Gallup research indicates that indicating that 29% of the U.S. workforce is engaged (i.e. loyal, enthusiastic, and productive) whereas 55% is passively disengaged. That is, they are going through the motions, doing only what they must, “mailing it in,” coasting, etc. What about the other 16%? Are they engaged? If true, how do you explain these statistics?
Friedman: Yes, there is a crying need to fix the problem of disengagement and distraction, though it’s difficult to assign accurate numbers to how many suffer this problem. The interesting question is the diagnostic one: What causes people to feel disconnected and unfocused? My research and practice indicates that people need to be doing work they love and to love the work they do. They need to feel that their efforts matter for the people and causes about which they really care. Further, they need to be doing work with people they respect and enjoy. Finally, they need to feel free to choose where, when and how it all gets done. It’s not easy to put these conditions in place, but it is certainly possible to do so, as I have seen and shown in my work in organizations and communities using the Total Leadership approach.
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To read the complete interview, please click here.
You are invited to check out the resources at www.totalleadership.org.
Interview: Matthew E. May
Matthew E. May
Here is a brief excerpt from my interview of May.
Morris: Please cite a few of Toyota’s most significant “elegant solutions.”
May: Elegant solutions are those that achieve the maximum effect with the minimum means. So I view the Toyota Production System as an elegant solution, because it defies the conventional thinking that given quality, cost, and speed, you can have 2 but not all 3. I regularly disprove that in workshop simulations by showing how small changes at high leverage points can yield the highest quality, lowest cost, optimal speed, and best safety…if you think like a “systems thinker” and design work to put the worker in charge of their work product and process.
Morris: In The Elegant Solution, you identify three “big traps” that can “stop innovation cold”: “swinging for the fences,” “getting too clever,” and “solving problems frivolously.” How so?
May: They are temptations that block the everyman, and thus the organization, from achieving company wide creativity. “Swinging for fences” is the killer app trap, the mindset that only grand slam homeruns count. Watch baseball or read Moneyball and you’ll realize that on-base percentage, singles, are what matters. No ball team is made up of homerun hitters, and the ones they have usually possess a poor batting average or at least a high strikeout rate. In business, that translates to high risk and carrying cost. “Getting too clever” is the bells and whistles trap. I have a smartphone that’s really dumb, because with all due respect to the fancy apps, it regularly drops calls. If we lose sight of what our customers or users truly value, we get caught up in what the competitor is doing, and begin adding features. Pretty soon feature creep begets feature fatigue. “Solving problems frivolously” means spending time and energy, both valuable resources, on problems outside of our control. Looking at most company employee suggestion systems, you find ideas disguised as fancy complaints for someone else to solve. At Toyota, an idea is defined as something within your control to improve.
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If you wish to receive the complete interview, please contact me at interllect@mindspring.com.
You are invited to check out the wealth of resources at:
Book Review: The Global Brain
The Global Brain: Your Roadmap for Innovating Faster and Smarter in a Networked World
Satish Nambisan and Mohanbir Sawhney
Wharton School Publishing (2007)
Nambisan and Sawhney focus on “the diverse set of external players that constitute the innovation network for the companies” discussed in this book such as P&G, IBM, Boeing, and Apple; and Network-centric innovation to describe “the underlying principles of collaborative innovation in such a context.” They add that a common theme n their research was their interest in the concept of distributed innovation. That is, “innovation initiatives that are spread across a diverse network of partners.” Their vehicle for exploration was the Kellogg Innovation Network (KIN), “a forum for senior innovation managers of large companies – affiliated with the Center for Research in Information and Technology that [Sawhney] directs at the Kellogg School of Management. The KIN is an excellent example of the power of the Global Brain in action.”
During the course of their narrative, they respond to questions such as these:
Why should companies seek innovation externally during a transition from being firm-centric and network-centric?
What are the core principles of network-centric innovation?
What are the four basic models and key elements of network-centric innovation?
How to develop a contingent framework that maps the context for innovation?
Which guidelines can help managers to evaluate the different types of opportunities that are most appropriate to their organization’s resources, capabilities, and strategies?
After completing their exploration of the Global Brain and “painting a picture of the landscape of network-centric innovation,” Nambisan and Sawhney urge their reader to chart her or his own organization’s “journey” to position it as a player in the same rich and diverse landscape. “We have a simple mantra for [achieving] this: Think BIG, Start SMALL, Scale FAST.”
Interview: Lawrence Hrebiniak
Hrebiniak is a professor in the Department of Management of the Wharton School at the University of Pennsylvania. He has been a member of the Wharton faculty since 1976 and currently teaches courses in competitive strategy and strategy implementation in the Wharton M.B.A. and Executive Education programs. His current research is concerned primarily with strategy execution and organizational design. He is also interested in strategic adaptation as organizations manage change and execution efforts over time to remain competitive. He co-authored Implementing Strategy (1984) and authored The We-Force in Management (1994) and most recently, Making Strategy Work (2005) as well as numerous articles.
Here is a brief excerpt from my interview of Hrebiniak.
Morris: You recommend a strategy to achieve rapid growth with a business model that scales rapidly while establishing market supremacy, also one that puts, in your words, “the game out of reach” from competition. What is the first step to take when devising such a strategy?
Hrebiniak: The first step is to make sure that adequate industry and competitor analysis is done to justify the chosen strategy. Gaining first-mover advantage or advantage due to growth, large size and market power depends very much on industry structure, industry forces, the resources and capabilities of competitors, and the ease with which others can initiate or block your strategy. The next step is to ensure that the “demands” of the strategy are being met adequately in the implementation process.
Strategies demand the development of the right organizational capabilities to support them. They demand appropriate structures, coordination mechanisms, incentives, controls and knowledge sharing. They rely on managers who understand the logical relationship between planning and execution and who can make the right decisions to put the game out of reach. This same basic approach applies to the implementation of all strategies. Over the years, I have observed this mistake when organizations attempt to improve process: “firefighting.” That is, responding to the symptoms of a problem rather than to its root causes.
If you wish to read the entire Hrebiniak interview, please contact me at interllect@mindspring.com.
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