Ratings Versus Rankings
To celebrate top performers and to apply peer pressure on the rest of the team, leaders are sometimes tempted to rank team members in the performance evaluation process. Whereas ratings allow team members to judge themselves against a standard, rankings force colleagues to compare themselves to others, rather than to absolute results.
This pits team members against one another and often produces competitive jealousy, bitterness, and bad feelings between colleagues. Rankings too often undermine the goodwill and spirit of the team and result in a negative climate that actually decreases the long-term performance of the majority of the team. Since there can only be one top performer and only a limited number of high-ranking winners, rankings demotivate those who begin to see themselves as perpetual underperformers. Rankings showcase losers more than they highlight winners.
The goal of great teams is to have all A players and winners. This is where ratings against a set of standards come to the rescue. The motivating alternative to a ranking system is a criterion system where success is determined by whether people reach a specific level, target, or goal independent of what others accomplish.
Ratings allow leaders and team members to know where they stand against a set of predetermined outcomes or attributes. Not only do ratings motivate people to perform at a higher level, but research has also shown that team members in a rating system are more likely to share with their colleagues the processes and actions that led to their success. With an unlimited number of winners, team members come to know exactly what is required of them to earn the recognition and reward they deserve through performance.
When organizations tie evaluations of managers to the cumulative ratings of individual performers, then the team becomes fully aligned with the idea that performance is a sport where everyone can and should win.
It’s time to dump the urge to rank people and commit to the advantages of rating performance. Ratings are the points of a compass that show everyone the path to higher performance. When everyone can reach the highest standards, performance has the potential to soar. As opposed to ranking people, ratings allow everyone to shine brightly. That’s the color of gold for team success.
Re: The goal of great teams is to have all A players and winners.
I'm not sure if this is a realistic goal. At one company, I was asked to look into why turnover was so high among our salesforce. I was surprised to see that a little more than half of the turnover was involuntary - meaning the manager let them go rather than the salesperson quitting. In my experience, turnover usually fits an 90% voluntary to 10% involuntary split. I called and asked sales managers why they were getting rid of so many people. They all said the same thing - those people weren't going to turn out to be Rock Stars (sell a lot of product) and they were getting rid of them early to make room/find potential future Rock Stars.
There was a myth at the company that the top producing branches at the company were comprised of all Rock Stars. This couldn't have been further from the truth. I collected data on 300 branches and over 15,000 sales people over a 3 year period. I plotted the number of loans a branch produced by the number of sales people achieving that amount (0 loans, 1 loan, 2 loans, etc.). The top performing branches resulted in a normal distribution. That is, they had a few Rock Stars on their team, a few under performers, but the majority of their teams fell within 2 standard deviations from the mean. The other thing that differentiated top performing branches was stability - same manager and longer tenured sales people (but not that long - avg. tenure was only 1.5 years).
The lowest performing branches distribution was heavily skewed to the right - that is - the majority of their sales people's production feel below 2 standard deviations from the mean - because they were constantly getting rid of average performers in search of Rock Stars. My message to the low performing managers was simple - stop firing your average and just below average salespeople until you can 'stabilize' your team.