A Yahoo Employee-Ranking System Is Challenged in Court

ny times ^ | 2-1-2016 | VINDU GOEL

[MD Expat in PA]

It sounds to me as if Yahoo is utilizing a forced ranking form of employee evaluations.

It was not developed by but make popular by GE under Jack Welch in the 1980's.

http://www.hr.com/en/magazines/all_articles/forced-ranking-performance-appraisal-method-is-it-_hr26wbz9.html

http://www.forbes.com/sites/victorlipman/2012/07/19/the-pros-and-cons-of-forced-rankings-a-managers-perspective/#59950b8a7c28

While controversial among some HR professionals and corporate managers, some are adherents either to forced rankings or its somewhat more benign 9-Box scoring believing it is an effective way of cutting out the deadwood in an organization and forcing managers to more realistically evaluate employee performance across their team.

I've seen in some companies where I've previously worked where managers tend to inflate the performance evaluations of their direct reports as not to do so would reflect poorly on themselves as managers.

A forced ranking or a form of it like the 9-Box scoring such as we use at my present company, forces managers to more honestly evaluate employee performance - for better or worse.

And there is nothing illegal about a company using these types of performance evaluations to cut out poor performers. There could be however a question as to whether it is legal to use performance reviews to hide the fact of a company is downsizing and or laying off many workers as opposed to cutting the dead wood and replacing them.

But I will also say that California has the worst laws in the nation when it comes to employee relations and employment law from a business perspective - they are very anti-business.

alleges that the company's senior managers routinely manipulated the rating system to fire hundreds of people without just cause to achieve the company's financial goals.

Well, a company does have its duty to its shareholders to achieve the company's financial goals. They are not after all, running a charity or a make work program. Don't perform, you are fired.

I don't care how liberal a company culture is, the "ratings system" that they all follow is whether a division or product is making money. If it isn't the people who work there get fired. So this sounds like BS to me.

You obviously do not know how ratings systems were developed or how they were used. In short, ratings systems were designed as zero sum games. On a scale of 1-5 (1 being best), you had to have an equal number of 1's and 5's, and an equal number of 2's and 4's. Then, once a year, regardless of unit profitability all 5's get fired. This year's 4's are on notice that they are now at the bottom of the pile, and may very well be next year's 5's. New hires get sprinkled in, and you do it all over again. This type of rating system leads to a dysfunctional company because employees sabotage one another to make sure that their peers get lower evaluations than them. It is referred to often times as "stack ranking", and by now most MBA programs point out the fallacy of the system and most companies are moving away from it.

From my perspective both of you are right and wrong and here is why.

Again as I mentioned up post, I've worked at companies were managers tend to over inflate their direct report's evaluation scores as a way of inflating their own scores. In companies were managers are ranked to some extent on their direct report's scores, the pressure to overlook and or hide poor performers is huge.

For instance, I once worked at a tech company that for one year, used an extreme form of 360 employee evaluations. I had to do not only a self-evaluation, but also an evaluation - a performance review of my boss and on her boss and on my direct reports, and my direct reports also had to do a self-evaluation on themselves and on me and on my boss. But as a manger, I also had to solicit two performance evaluations from two of my peers. This was not a big company BTW, only about 50 employees and overall a very young set of employees, on average only in their mid-20's, most with only a year or two with the company, while I was a "seasoned employee" having been there over 5 years and was in my mid 40's at the time. I also had a small team reporting to me of only 3 direct reports.

What ended up happing was that the "peer" reviews were skewed very heavily toward those who the peers who had an outside of work social relationship with - in other words, their buddies and it had little to do with actual work performance. While my department and my team worked closely with other teams and in many respects, out-performed them, if I or my team members didn't go to the Friday Happy Hours, the after work poker parties, in other words, were not part of the click, we had a hard time even finding a "peers" willing to give us a peer review. But then again no one wanted to give someone a "bad" review either as they feared that went around would come around.

And while manager reviews by direct reports were supposedly confidential, being the company was so small, no one was willing to give an honest review of their boss and visa versa.

At the end of this experiment, nearly every employee was rated as a 5 - the top score except for a few managers and team members of the very smallest of teams who didn't directly interact on a daily basis with the bigger teams like software development and customer support - the biggest loser was the lowly 2 person Finance/Accounting department. It obviously came down to a personality contest rather than a true assessment of performance and this type of employee evaluation was abandoned for a more traditional one the following year.

This type of rating system leads to a dysfunctional company because employees sabotage one another to make sure that their peers get lower evaluations than them.

This is also true with a forced ranking system. It does tend to foster a rather cut throat environment. But then again, isn't it always such?

However, even working at companies that did not employ any type of forced raking employee evaluations or any 360 reviews, and even at some very small family owned companies that didn't have any type of annual reviews, I had other employees or the relatives of the owner, try to take credit for my work or try to undercut me and sabotage me at every opportunity. Such is life in the real world.

You either learn to deal with it, rise above it or look for a better job opportunity.

FWIW, I've never left a job voluntarily or got fired from or was I ever laid off from a job, where the next job was not a better opportunity. And every job I've ever had, no matter how bad or no matter how brief, never did I not come away learning something that helped me in my next job.