I’m like most people. To get better, I need to know how I’m doing now. Sometimes I don’t understand the game I’m playing or the rules, but feedback sets me right every time. Whatever you’re learning—how to bowl, use Excel, or learn a new field—feedback works as a corrective mechanism. In school, I could hardly wait to get my test grades, report cards, and homework scores. I wanted to do well and that feedback helped me measure my own success. If my grades were disappointing, I would schedule some advice and coaching with the instructor. But I only knew what I needed because I’d been given a progress report.
Getting feedback doesn’t come so easy in the adult, corporate world. Although a few supervisors would let me know how I was doing on a daily basis, most waited until the annual performance appraisal, that “Day of Judgment” when I would discover I wasn’t doing as well as I thought I was, like finding out about “the poor job [I] did on a presentation six months ago.” To avoid too much conflict my manager wrote on the review, “needs development in presentation skills.” Of course, at that point—six months later—such a report was almost useless, given the fact I had made two presentations since then without the benefit of any real-time coaching following the “marginal” presentation. Other review disappointments came when I learned that the bosses discovered I tended to procrastinate or avoid uninteresting assignments that didn’t interest me. Guess I wasn’t good at hiding much.
The rest of the performance discussion was aimed at justifying the final performance appraisal number, based on numbers selected from a scale from one to five. Corporate guidelines required that only a certain percentage of employees were assigned to each performance number. For example, a rating of one was reserved for the top ten percent as determined by your manager. A two was usually for the next twenty-percent of employees and so forth. Fortunately I usually fared well in this exercise, so I didn’t spend much time thinking about the negatives of performance appraisal.
That all changed when I reached a position on a management committee and reported to the CEO. Being in human resources made me privy to the rating of everyone in the company, including the management committee members, and that’s how I discovered that every member of the committee was “exceptional,” the top rating. Was it just an uncanny coincidence? I had to ask. When I did, namely why our group didn’t operate with the same rules—we were supposedly required to have only ten percent in the top rating—the CEO replied, “Everyone who reached the executive level was exceptional, otherwise they wouldn’t have the position.” Considering the fact that one of these so-called “exceptional” people was later fired, I was skeptical and found it hypocritical, but I was happy to maintain a superior rating. Whatever I felt, one thing was clear: most management committees don’t bother with the performance appraisal process, only the peasants must comply. I was no longer a peasant but used to be and hadn’t forgotten where I’d come from.
Exxon practiced something called “forced ranking,” the ultimate system for determining an employee’s performance (value) relative to others. Employees were ranked from the perceived best performing employee to the lowest performing employee and those in the bottom five to ten percent were scrutinized for potential termination.
From 1979 to 1981, I acted as compensation manager for Exxon USA, and since pay and bonuses were based on an employee’s position in the rank list, I was the de facto cultural guardian of forced ranking. The system is institutionalized at Exxon and I was one of its champions, making me an accomplice in what I later believed to be a “crime.” Not in a legal sense, but in an emotional sense, because what I did demoralized employees, negatively impacted team work, and was subject to managerial manipulation.
To complete a final rank list, managers would meet in the proverbial “smoke-filled room” to lobby for their employees. Your final rank depended in part on how good your manager was at selling you to the group. A conversation might go something like this: Stan would say, “I believe that Robert, the new MBA from Harvard, has tremendous potential and if we don’t rank him highly this first year his career could be stunted.”
Glenn would respond, “But Stan, Robert hasn’t accomplished much this year, so why should he have a high ranking?
“He’s new and a low ranking will be hard to overcome in next year’s ranking. We need to give him more time. I say we put Matt at the low end of the list to meet the distribution guidelines. He’s always done a great job, but he’ll retire in a couple of years and a low ranking won’t impact him much.”
And on it went, a low grade corporate fever that never quite went away.
If you made it in the system for twenty years or so, you probably wouldn’t be fired. Exxon tried to make those decisions during an employee’s first five years of employment. The alternative to firing was being assigned to the “dead pool,” usually disguised well, but sometimes not. One announcement that struck me was a senior manager’s promotion to Manager of Transition and Feasibility. I don’t think anyone knew what that meant, including the person receiving the title.
I decided to leave Exxon in 1981 after thirteen years with the company. I was still a fan of forced ranking, but I did pause when Frank Sharp, another HR professional, came to my office a few days prior to my exit. He walked in and proclaimed, “Doug, I’m really happy you’re leaving.”
I was a little startled but asked, “Frank, why is that?”
Frank’s answer: “I won’t have to compete with you any longer for a good position on the rank list!” Forced ranking was probably a disincentive for team work.
Over the next several years, I decided that forced ranking was dysfunctional and ran counter to keeping employees engaged and motivated, except for those anointed a crown prince or princess. They always landed in the top ten to fifteen percent. Ranking generates very negative feelings for those in the bottom half, given that eighty percent or more in any group perceive they are in the top quarter. It reminds me of the employees, subject to a bell curve performance distribution, who would wear t-shirts emblazoned with the words, “Don’t ask me, I’m a three.”
I’m not sure why we need to rank anything. I don’t rank my friends to determine who will get my time and attention. I don’t rank food, given the fluctuation in preference. What is the common standard on which we can evaluate each person’s unique gifts and talents?
Ranking implies a relative value, but that value is subjective and not absolute. Value is a term associated with worth, which is often financial. I just want to appreciate people, nature, music, food, and experiences for their own uniqueness and beauty. I’ll leave ranking to the crippled organizations that believe it’s the best way to engage employees and improve their workforce.
Doug Gehrman teaches transformational leadership at Houston Baptist University. He had a 40-year corporate career in energy and financial services. He can be reached at firstname.lastname@example.org