Stack Ranking: Brilliant Management or Inherent Absurdity

2613 WordsAug 19, 201211 Pages
Stack Ranking: Brilliant Management or Inherent Absurdity Abstract Employee stack ranking is a performance measurement system that requires every manager to rank its employees from excellent to poor. Stack ranking was popularized by Jack Welch at General Electric in the 1980’s. Since that time it has become a popular management technique. The use of stack ranking has many demonstrated successes, but many managers and business analysts are beginning to questions its value to an organization. In this paper I will examine from a critical perspective both the good and bad aspects of stack ranking in an attempt to determine its long term viability as an organization behavior. Stack Ranking: Brilliant Management or Inherent…show more content…
This tendency results in inflated ratings, as well as wholly inaccurate ones, since areas for performance improvement tend to be ignored or swept under the rug in performance appraisals. Central tendency bias refers to a tendency for raters, or managers to evaluate most of their employees as "average" when they apply a rating scale. So, for example, given a scale with points that run from one (poor) to seven (excellent), with four being the average, many managers will refuse to use the points at either of the ends. There will be a tendency for almost all ratings to fall within the 3-5 range. This can be problematic since a poor performer may be rated slightly above average while outstanding employee may be rated in that same 3-5 range even though he or she deserves a higher rating. By eliminating the use of the aforementioned biases, stack ranking helps a management staff identify both its high performers and its poor performers. Once high performers are identified the company can provide pay, bonuses and promotion opportunities commensurate with the employee’s contribution and potential. Thereby eliminating the brain drain effect and allowing a company to retain its strongest assets. On the opposite end of the spectrum poor performers can be identified and appropriate action can be taken

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