Would you recommend that an employer use a forced distribution approach to performance appraisal? What are the pros and cons?
I wouldn’t recommend a forced distribution approach performance appraisal because:
*Managers have no training.
*Managers want to be liked.
*Setting goals is tough and imprecise.
*There are few consequences for not conducting performance reviews.
*Ratings are not consistent among raters.
*Leaders don't set the example.
The pros and cons
*Creates and sustains a high-performance culture. Involuntary turnover is managed by eliminating weak performers and retaining strong performers.
*Correlates with total return to shareholders. Recent research indicates a strong correlation between companies with strong performance-management processes and three- and five-year total shareholder returns. The research, just being published by Andersen, involves over 200 companies across a wide range of industries. It shows that companies that use individual criteria to assess the performance of employees and managers significantly outperform companies that focus primarily on measuring business-unit or overall company performance. Also, the study shows, companies whose managers are highly skilled at communicating business goals and objectives and providing structured feedback also enjoy higher total shareholder returns.
*Establishes well-defined consequences. Top-performing employees receive substantially larger rewards (i.e., base pay, bonus, options) than the average performers. Those falling at the lower end of the scale typically receive coaching and are on notice to improve performance.
*Makes performance management a corporate priority. With real consequences, performance management takes on renewed meaning.
*Lets employees know where they stand. One of the common complaints from employees