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 Win-win strategies for climate and food security
02.10.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht The personality factor: How to foster the sharing of research data
06.09.2017 | ZBW – Leibniz-Informationszentrum Wirtschaft

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: Neutron star merger directly observed for the first time

University of Maryland researchers contribute to historic detection of gravitational waves and light created by event

On August 17, 2017, at 12:41:04 UTC, scientists made the first direct observation of a merger between two neutron stars--the dense, collapsed cores that remain...

Im Focus: Breaking: the first light from two neutron stars merging

Seven new papers describe the first-ever detection of light from a gravitational wave source. The event, caused by two neutron stars colliding and merging together, was dubbed GW170817 because it sent ripples through space-time that reached Earth on 2017 August 17. Around the world, hundreds of excited astronomers mobilized quickly and were able to observe the event using numerous telescopes, providing a wealth of new data.

Previous detections of gravitational waves have all involved the merger of two black holes, a feat that won the 2017 Nobel Prize in Physics earlier this month....

Im Focus: Smart sensors for efficient processes

Material defects in end products can quickly result in failures in many areas of industry, and have a massive impact on the safe use of their products. This is why, in the field of quality assurance, intelligent, nondestructive sensor systems play a key role. They allow testing components and parts in a rapid and cost-efficient manner without destroying the actual product or changing its surface. Experts from the Fraunhofer IZFP in Saarbrücken will be presenting two exhibits at the Blechexpo in Stuttgart from 7–10 November 2017 that allow fast, reliable, and automated characterization of materials and detection of defects (Hall 5, Booth 5306).

When quality testing uses time-consuming destructive test methods, it can result in enormous costs due to damaging or destroying the products. And given that...

Im Focus: Cold molecules on collision course

Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.

How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...

Im Focus: Shrinking the proton again!

Scientists from the Max Planck Institute of Quantum Optics, using high precision laser spectroscopy of atomic hydrogen, confirm the surprisingly small value of the proton radius determined from muonic hydrogen.

It was one of the breakthroughs of the year 2010: Laser spectroscopy of muonic hydrogen resulted in a value for the proton charge radius that was significantly...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ASEAN Member States discuss the future role of renewable energy

17.10.2017 | Event News

World Health Summit 2017: International experts set the course for the future of Global Health

10.10.2017 | Event News

Climate Engineering Conference 2017 Opens in Berlin

10.10.2017 | Event News

 
Latest News

Terahertz spectroscopy goes nano

20.10.2017 | Information Technology

Strange but true: Turning a material upside down can sometimes make it softer

20.10.2017 | Materials Sciences

NRL clarifies valley polarization for electronic and optoelectronic technologies

20.10.2017 | Interdisciplinary Research

VideoLinks
B2B-VideoLinks
More VideoLinks >>>