Reader: At the end of every year, my company conducts management reviews, assigning a rating of 1 (unacceptable) to 5 (outstanding) to everyone who was an employee during the year, whether or not they're still at the company. The performance rating system requires a fixed distribution of workers — a certain percentage at each level every year. While finding workers deserving a "1" rating was relatively easy at first, over time it became a problem to assign "unacceptable" to workers who are perfectly acceptable.
To meet the fixed distribution goal, management's solution has been to assign "1" to workers who retired during the year, regardless of their performance. The retirees won't see the "1" rating, but they also won't receive the prorated annual bonus they would otherwise receive for the time they worked in their last year. This seems unethical. What do you think?
Karla: Welcome to the game show “Whose Job Is It, Anyway?” where evaluations are made up, and the points don’t matter.
The performance rating system you describe goes by many names — forced ranking, vitality curve, stacked ranking, “rank and yank.” Supporters of forced ranking, such as former General Electric chief executive Jack Welch, say it compels managers to give candid feedback to — and, if necessary, eliminate — substandard performers, fostering a more-successful workforce. Critics say it penalizes satisfactory workers and leads to unhealthy competitiveness. Pittsburgh-area human resources director Mark Marsen, who worked for IBM when it used forced ranking, says that while candid discussions are crucial to improving performance, grading on an artificial curve can result in managers and workers focusing on ways to “game the system.”
And it can end up in costly settlements for employers. Microsoft, Goodyear, Ford, Capital One and other companies have been hit with lawsuits asserting that their forced-ranking practices enabled discrimination against groups of workers on the basis of age, race or sex. Which brings me to your question.
Management at your company probably figures that assigning “1” to already-departed retirees is a no-harm, no-foul solution to meeting ratings quotas. But if only older workers are being denied bonuses they’re entitled to, it could be argued that this results in a “disparate impact” in violation of the Age Discrimination in Employment Act. “The employer would have to show that the practice is based on a reasonable factor other than age,” says Amy Epstein Gluck, an employment law partner at FisherBroyles.
Although forced ranking is still popular with some employers, others have dropped it in favor of less rigid evaluation systems in which managers are trained to provide bias-free feedback year-round. This still allows for weeding out bad performers — but, says Marsen, “if somebody is going to be ranked [poorly], there better be very clear job-related criteria” behind that rating.
Thanks also to Tom Spiggle of Spiggle Law Firm.
PRO TIP: You can ask your state’s human rights commission or the federal Equal Employment Opportunity Commission to investigate suspected age discrimination even if you’ve left your workplace — but be aware of time limits for filing complaints.