Yahoo fuels the rank-and-yank debate

Reflections on Yahoo’s ‘forced rankings’ policy by Mark Fieldhouse, Director

 

Yahoo and its CEO, Marissa Mayer, are once again hitting the headlines because of their HR practices. Back in February it was due to its working from home (or lack thereof) announcement, this time it’s for deploying a policy that asks managers to rank employees on a bell curve, or validity model, firing those at the low end. This prompted us to think about managing employee performance and question whether, despite the outcry, the forced rankings are good HR practice?

Taking Jack Welch‘s validity model, it categorises those ranked in the top 20 per cent of the workforce as most productive, 70 per cent (the “vital 70”) working adequately and the other 10 per cent (“bottom 10”) as non-producers – who should be fired.

Although, this approach seems overly simplified, in reality companies are going to have some employees who are under performing and HR departments will inevitably need to consider how to manage them. How do you maintain and reward the top 20 per cent? How do you get the middle 70 per cent to become top performers? How do you manage the bottom 10 per cent who crudely, if they can’t improve, may simply just not be the right fit for the organisation or the job may not be the right fit for them.

Applying the validity model, or Welch’s “rank-and-yank system”, based purely on objective statistics also does not allow for consideration of the human element. Measurement needs to include subjective elements – personal circumstances, for example – for an honest and fair view.

Even then, before applying such a criteria it is essential to know how to respond to the results and manage each of the ‘types’ identified – because as soon as employees are identified on the curve, in terms of motivation and skill, there is a responsibility to support them.

Whether this approach is regarded as right or wrong, and the debate continues, it does provide insight into how the workforce performs peer to peer, helping to measure the effect of recruitment decisions and the financial impact of low performers.

So maybe, Mayer isn’t all too wrong after all.

 

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