On 1st November 2012, the Irish Independent published an article highlighting the increasingly common HR practice of ‘stack ranking’, which is used by 60% of the Top Fortune 500 companies, and warned about its potentially hazardous effects on the culture of their Irish-based subsidiaries. They were citing a recently published from Vanity Fair where employees contributing to the piece were openly blaming their company's current cultural problems on this policy. Essentially it requires managers to award top performer status (i.e. 1 out of 5) to 10% of their team and likewise label a similar number as a ‘5’, (i.e. ‘poor’ performers). They are effectively showing them the door, just in case they’d like to leave, and at the same time, often withdraw training & development. The meaning is clear.
Whilst, this talent sharpening process undoubtedly achieves its main aim of continually raising the talent bar within the organisation, the negative emotional impact of ‘getting a 5’ on the staff member involved cannot be underestimated. But people are resilient and will bounce back by looking after themselves and moving on to more productive work situations, with the organisation often even assisting in this process. However, on the cultural downside, it is worth looking at what may be happening here.
As in any animal system, some sinister ‘survival of the fittest’ tactics may be being played out. If any group senses a weaker member, group members will actively try to squeeze it out. Collectively, possibly openly or even unconsciously, someone can be singled out as a ‘5’ target. Colleagues may withhold information from, or fail to properly involve, these unfortunate targets leaving them increasingly isolated and unsupported to perform in their work roles. These continuous hospital passes can result in the low rank eventually being awarded, and then the tables may actually turn. The individual may then become a target of false support from co-workers, i.e. enough friendliness and comfort to stay happy in their role. Effectively that person needs to stay around, so that the ‘5’ quota remains fulfilled in the group – otherwise someone else is next. Essentially the cultural process becomes one of ‘unrelating’ or false relations, where avoiding, withholding, wariness and second guessing are behavioural norms, and passive aggressive acts are commonplace. Trust is not attainable under these circumstances.
There may be another high price to pay here, in the form of change readiness. In their survey of 4 large US organisations, Madsen, Miller & John (2005) found that the strength of social relationships at work was positively correlated with readiness for change (using established measures). They also found a positive correlation for social relationship strength with organisational commitment which in turn was positively correlated with readiness for change. It would therefore appear that any practice which reduces the strength of work relationships is also likely to reduce readiness for change – which in today’s fast moving world is not at all conducive to organisational health.
Companies activating this policy may need to consider how to develop closer and more productive working relationships in their teams & groups so as to counteract these innate survival instincts and instead play the longer, more strategic culture game. Providing continued access to development for ‘5’ performers will undoubtedly help and productive group dynamics and true human connections can be generated through organisational supervision techniques. These approaches offer one sure route towards a trusting, high capability and change-ready culture, whilst keeping talent levels rising.
Reference: Madsen, S.R., Miller, D, John, C.R (2005) Readiness for Organisational Change. Human Resource Development Quarterly, vol 16, No 2. Wiley Periodicals.