Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

"Rank and Yank" Systems Could Improve Organizational Performance

04.03.2005


A study finds that forced distribution ratings systems, where a predetermined percentage of low-performing employees is fired every year, can be an effective way to improve a company’s workforce, although these benefits diminish over time.



"A significant number of organizations either already use, or are considering using, ’rank and yank’ systems of the type we studied, said Steve Scullen, one of the authors and associate professor of management at Drake University. "Many think these systems are a vital key to organizational success. Detractors argue strongly that ’rank and yank’ systems are discriminatory and counterproductive. Unfortunately, there is almost no research available to inform business people about how such systems might affect the quality of an organization’s workforce. This study provides the first step in that direction."

By asking if it is "reasonable to expect that an organization would be able to improve the performance potential of its workforce by firing the workers judged to be performing most poorly, and replacing them with promising applicants," the authors create one of the first studies to address this performance management system.


Supporters of FDRS believe it motivates the best employees, removes dead wood, and helps to develop strong leaders. Detractors see a myriad of problems including a system that is open to bias and discourages teamwork. The authors found that "in all our scenarios, workforce performance potential at the end of the simulation was higher than it was at the beginning." The overall impact of FDRS on the company’s performance was not measured.

Using a computer simulation, they modeled organizations’ ability to improve the quality of their workforces over a 30-year period after implementing FDRS. For the study to be accurate, they included the most significant variables: percentage of employees fired, reliability of ratings that determined who is fired, validity of methods to hire new employees, the selection ratio of new hires and voluntary turnover. Under conditions where the greatest numbers of poorly rated employees were fired and the rating system used to fire them was reliable, the average potential rose 48 percent — the highest. In general, the annual average improvement was approximately 16 percent for the first two years falling to 2 percent in year six and 1 percent in year 10. After year 20 there was no improvement.

"From a statistical or psychometric perspective, FDRS definitely hold promise for improving the average potential of organizational workforces," Scullen said. "We also found, however, that the large majority of improvement would occur in the first few years, after which little or no improvement should be expected. This raises several important questions, which our research so far cannot answer. Is the amount of potential improvement worth the potential cost? What are the nature and the magnitudes of the side effects on morale, recruiting, retention, productivity, etc.? And, finally, what should be done when the point of diminishing returns has been reached?"

This study is published in the current issue of Personnel Psychology, which publishes applied psychological research on personnel problems facing public and private sector organizations. Articles deal with all human resource topics, training and development, performance and career management, diversity, leadership, rewards and recognition, and work attitudes and motivation.

Scullen, who holds a Ph.D. in human resource management from the University of Iowa, has been published in numerous journals and books. His primary research interest is the measurement and management of job performance.

| newswise
Further information:
http://www.drake.edu

More articles from Studies and Analyses:

nachricht New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)

nachricht Reusable carbon nanotubes could be the water filter of the future, says RIT study
30.03.2017 | Rochester Institute of Technology

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Making lightweight construction suitable for series production

More and more automobile companies are focusing on body parts made of carbon fiber reinforced plastics (CFRP). However, manufacturing and repair costs must be further reduced in order to make CFRP more economical in use. Together with the Volkswagen AG and five other partners in the project HolQueSt 3D, the Laser Zentrum Hannover e.V. (LZH) has developed laser processes for the automatic trimming, drilling and repair of three-dimensional components.

Automated manufacturing processes are the basis for ultimately establishing the series production of CFRP components. In the project HolQueSt 3D, the LZH has...

Im Focus: Wonder material? Novel nanotube structure strengthens thin films for flexible electronics

Reflecting the structure of composites found in nature and the ancient world, researchers at the University of Illinois at Urbana-Champaign have synthesized thin carbon nanotube (CNT) textiles that exhibit both high electrical conductivity and a level of toughness that is about fifty times higher than copper films, currently used in electronics.

"The structural robustness of thin metal films has significant importance for the reliable operation of smart skin and flexible electronics including...

Im Focus: Deep inside Galaxy M87

The nearby, giant radio galaxy M87 hosts a supermassive black hole (BH) and is well-known for its bright jet dominating the spectrum over ten orders of magnitude in frequency. Due to its proximity, jet prominence, and the large black hole mass, M87 is the best laboratory for investigating the formation, acceleration, and collimation of relativistic jets. A research team led by Silke Britzen from the Max Planck Institute for Radio Astronomy in Bonn, Germany, has found strong indication for turbulent processes connecting the accretion disk and the jet of that galaxy providing insights into the longstanding problem of the origin of astrophysical jets.

Supermassive black holes form some of the most enigmatic phenomena in astrophysics. Their enormous energy output is supposed to be generated by the...

Im Focus: A Quantum Low Pass for Photons

Physicists in Garching observe novel quantum effect that limits the number of emitted photons.

The probability to find a certain number of photons inside a laser pulse usually corresponds to a classical distribution of independent events, the so-called...

Im Focus: Microprocessors based on a layer of just three atoms

Microprocessors based on atomically thin materials hold the promise of the evolution of traditional processors as well as new applications in the field of flexible electronics. Now, a TU Wien research team led by Thomas Müller has made a breakthrough in this field as part of an ongoing research project.

Two-dimensional materials, or 2D materials for short, are extremely versatile, although – or often more precisely because – they are made up of just one or a...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Fighting drug resistant tuberculosis – InfectoGnostics meets MYCO-NET² partners in Peru

28.04.2017 | Event News

Expert meeting “Health Business Connect” will connect international medical technology companies

20.04.2017 | Event News

Wenn der Computer das Gehirn austrickst

18.04.2017 | Event News

 
Latest News

Wireless power can drive tiny electronic devices in the GI tract

28.04.2017 | Medical Engineering

Ice cave in Transylvania yields window into region's past

28.04.2017 | Earth Sciences

Nose2Brain – Better Therapy for Multiple Sclerosis

28.04.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>