Reports have been popping up this week detailing how Yahoo CEO, Marissa Mayer, has implemented a system where managers are forced to rank Yahoo employees on a bell curve and then fire those at the low end. This seems to be the second major HR disaster coming from Mayer’s reign after she arbitrarily banned all Yahoo employees from telecommuting earlier this year.
The problem, as Bloomberg Businessweek points-out, is that forced ranking systems tend to be bad for business due to the fact that employee performance may not follow a “mathematically-neat” bell curve. Rather, most companies have a large population of slightly below-average employees complimented by a small number “superstar” performers.
MIT researchers have also conducted an extensive study on forced ranking systems which found that the bell curve model becomes increasingly arbitrary and inaccurate over time, especially for companies like Yahoo who are undergoing large-scale layoffs. The study explains:
“As the company shrinks, the rigid distribution of the bell-curve forces managers to label a high performer as a mediocre. A high performer, unmotivated by such artificial demotion, behaves like a mediocre.”
This may be one of the major reasons why forced ranking systems have fallen out of favor since the 1980s, in addition to the fact that bell curve rankings, which inherently pits employees against each other, tend to negatively impact worker morale.
This seems to be exactly what’s going on at Yahoo, as employees are now venting their grievances on anonymous internal message boards and explaining how this system yields unjust results:
“I feel so uncomfortable because in order to meet the bell curve, I have to tell the employee that they missed when I truly don’t believe it to be the case.”
According to AllThingsD, Mayer has insisted that the ranking system is not forced, however, at least one employee has spoken out to refute that statement:
“It is 100% true that managers are told they need to put someone in occasionally misses to meet the distribution. It is not a cop out, as you mention. We are told, very clearly, that we have to rank someone low. So, forced ranking is in place, regardless of what Marissa thinks is happening. Maybe it’s not supposed to happen — but Marissa needs to make this very clear to upper management before they have us force rank next time.”
It remains to be seen if Mayer’s campaign will work to improve productivity at Yahoo. According to reports, over 600 Yahoo! employees have already been laid off in recent weeks at least in part due to the ranking system. It should be noted that the practice of forced ranking is definitely not illegal under California law. Regardless of the ultimate effects, however, it’s at least abundantly clear that a growing number of Yahoo employees are deeply concerned.
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