A Critical Look at HR Management
Another large public manufacturing company recently announced that it was changing its year-old managerial performance ranking system. Originally, management performance was ranked A (most likely to receive a raise or promotion), B (average), or C (facing dismissal). Under the company's ranking system, ten percent of all managers were to be rated C performers. After a number of employees claimed the company's ranking system was discriminatory and filed lawsuits, the company reduced the C level benchmark to five percent. In defending the performance ranking system, the company's CEO announced in a message sent to all employees that the system had "nothing to do with age or diversity" but "has everything to do with inspiring the best performance." This is just another example of a human resources-related program gone awry and one wonders what kind of advice the HR department gave company management before this performance system was adopted.
Despite the fact that a few well-known companies, including General Electric, are wedded to a performance ranking system, those systems face serious problems. As HR professionals, we are charged with recruiting and hiring only the best candidates for available positions. But under a perfomance ranking system, ala General Electric, we are then told that ten percent of the people we ultimately hire will fail. So assuming we work for an organization employing 1,000 people, we know that 100 of those people will face dismissal each year. And, after they're terminated, we will go out and hire 100 replacements, ten of which will matematically fall into the ten percent "unacceptable" catagory during the next performance year. So, baring turnover considerations, that means that 90 employees who were ranked at least "satisfactory" in the prior performance year will now find themselves on the chopping block. That just doesn't seem to make much sense.
Recognizing the potential liability associated with performance ranking systems, Goodyear and Ford Motor both abandoned their systems in 2002. Although a Goodyear spokesperson said the company's performance ranking system was not discriminatory, Ford Motor paid $10.6 million in March 2002 to settle an age discrimination suit brought by older workers who felt they were victimized by the system.
Now let's look at "initiatives."
When he was CEO of Ford Motor Company, Jacques Nasser reported that Ford was going to be heavily involved in Six Sigma, a complex quality improvement system espoused by Motorola, General Electic, and others. At the same time, he said that this was not just
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