Forced ranking refers to the practice where employers rank their employees against each other based on certain criteria, usually performance.
This is often considered a controversial practice as it can lead to a competitive environment, which may not be suitable for all industries or corporate cultures.
However, some Indian organizations believe that this method helps identify high-performing individuals for rewards and promotions, thereby driving performance.
The method involves categorizing employees into different performance levels, typically as 'top', 'middle', and 'bottom' performers. HR managers usually consider a variety of factors for this, such as performance metrics, contribution to team success, skills, and other attributes. In India, where team collaboration is highly valued, this method can sometimes be at odds with the cultural emphasis on collective achievement. The method may also involve a peer review component, which can be sensitive in a culture that generally respects hierarchy.
The scale usually involves a predetermined distribution. For instance, the system might dictate that 20% of employees must be categorized as top performers, 70% as middle performers, and 10% as low performers. The percentages can vary based on the organization's objectives. Such a scale can lead to scenarios where an employee is classified as a low performer not because of absolute poor performance, but because they are less accomplished than their peers. This has ethical implications and can have a significant impact on morale, which can be particularly problematic in the Indian context where familial and personal relationships in the workplace are common.
The system as a whole includes the method and scale but also involves the processes and procedures for implementing forced ranking. This includes the performance indicators used, the frequency of evaluation, and the consequences of the ranking. For instance, in some Indian IT companies, forced ranking might be used as part of annual appraisals, influencing promotions, salary hikes, and sometimes even layoffs.
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