Jenna Moates
MNGT 6150
Summer 2015
Dr. Ritvo
Case Paper

“Comparing Co-Workers against Each Other:
Does this Motivate Employees?” Case

The “Comparing Co-Workers against Each Other” case outlines the practice of evaluating employees by comparing performance to others that is used by around one-third of U.S. firms. This process evaluates an employee by ranking their performance based on other employees’ performances. For example, General Electric Co. use to apply the 20/70/10 ranking scale: 20 percent were top performers, 70 percent were middle performers, and 10 percent were the bottom performers. Ranking in the bottom 10 percent often resulted in being terminated from the firm. Firms in favor of this system argue that it’s an effective way to identify employees who are high-performing and which employees are slacking (Ivancevich, 2011).
When analyzing this system, some ethical concerns are raised. Some believe that evaluating by comparing leads to co-workers working against each other instead of working together. When employees are constantly at competition with each other, they are less apt to work together. For companies who rely on innovation and growth to succeed in their industry, the lack of collaboration and risk-taking could be detrimental. There has been discrimination suits accusing evaluators of ranking employees based on demographics instead of performance. It also brings to questions how reliable managers are when it comes to fairly ranking and identifying top performers (Ivancevich, 2011).
In a recent study conducted by Steve Scullen, of Drake University in Des Moines, Iowa, these performance-driven techniques may show immediate benefits, but these tend to fade in the long-term. His results show that when the bottom performers are terminated, middle and top performers show a 16 percent increase in productivity for the first few years. Over the next decade, the increase in productivity lowers to 6 percent within the third and fourth years, then to almost zero percent (Ivancevich, 2011). The ranking system pushes top-performers to continue maintaining or improving their performance level, but it also can promote competition among workers instead of collaboration. When employees are being evaluated, the expectancy and equity theory are important for managers to consider. Expectancy theory contributes to how strongly an employee feels an action is correlated with a desired outcome. For an employee to be motivated, it’s important for them to believe that they can achieve a desired outcome, or reward, based on their individual performance. When performance results are based on the actions of others, instead of the individual’s, this could lower any feelings of instrumentality and/or expectancy (Ivancevich, 2011). Basing performance on others could also lower an employee’s feeling of equity within the organization. An employee may excel in a certain area or aspect of their job that isn’t considered as important as other factors in identifying top performers. So even though it may be a factor that is crucial in completing a task or performing well, an employee may focus their efforts elsewhere. When employees believe that their performance will be based more on the performance of other (top performers) than individual performance, they will be less motivated. Investing in training for the low performers could show the employees that they are viewed as important to the organization’s success. If an employee sees that being ranked low as an opportunity, instead of a problem, they may be more motivated to learn and apply better performance practices. By identifying top performers, managers can get a better idea of what employee characteristics are important factors for achieving organizational goals. Identifying low performing employees could be used an opportunity to ensure training is provided that can help them succeed. By comparing employees based on each other’s performance, management can overlook important