Merits and Demerits of Ranking System
Ranking system is a process of evaluating employees. Chiefly it is done for determining payouts, promotion and for giving developmental vouchers. But in reality it is nothing more than the costly process fully judgmental and biased in nature.
It is a process in which various employees are compared with each other according to their performances. It points out how many and by how much degree are these employees better than, similar or less efficient from other each other. This type of ranking assists a great deal in determining the salary and perks to get distributed from the pool of limited money.
The decisive factors and standards for ranking method are largely subjective and fuzzy and objectively and specific basis .for e.g. on the basis of total quantity of sales generated, top sales salesman can be identified objectively. Likewise second and third salesman can also be found out and paid remuneration accordingly. Employees can also be ranked on the fuzzy basis such as “degree of getting well with team members”.
Merits
- Though the ranking system does not carries long list of advantages, but the most important merit of ranking system is that if offers the environment of competitive nature, which induces the workforce to increase their efficiency and work hard to produce quality output. It induces employees to work at their optimum level and to the best of their abilities and producing better quality of service or good.
- The second argument in favor of ranking system is that it promotes administrative functions. Many organizations, for making the decision of paying out the rewards and promotions utilize the ranking method. This method helps in setting the attainable standards.
Demerits
- The foremost demerit of ranking system lies in its administrative function. It provides rewards to the better ones in organization, people who perform better or more quality of output than their colleagues. So it does not reward people for their contribution. For e.g. let’s measure sales volume on an objective basis. Company decides to pay significant rise in pay to the top 20%, average reward to middle 60% and nothing to the employees at the bottom. if there are five members named as:
Pooja $101
Rakesh $100
Sameer $99
Neha $98
Komal $96
In this, we will find that Pooja gets big raise, while Rakesh, Sameer and Neha get a little and Komal receives no rewards. Despite the fact that all these five members have worked hard and contributed to the output but only few get the rewards. If we go through the figures, we will notice that Pooja is only one dollar ahead than Rakesh. There is not much difference between each sales person, but still they get face tough competition in getting equal rewards.
- Though the ranking system tries to work on objective level, but this is merely a concept and it never happen in realty. It is an extreme deception, based on biasness of employers.
- Usually what matters is the contribution of an employee in an organization and not his value evaluated through ranking system in corporate world. It hardly makes a difference whether he is best or worst. Ranking only classifies the people and fail in evaluating the true worth of an employee.
- Basically the goal of organization is to develop its manpower but ranking system instead of assisting in this manner it only indicates the best and the worst employee of organization, thus lowering their morale.
- Attitudes of employees towards ranking system are quite opposite. They find it totally biased in nature. It provides demoralizing effects to the people. It breaks their trust and morale. Employees usually disagree with results of this system thinking them to be subjective. They observe this method as capricious and unfair.
- Another argument against ranking system is based on the comparisons made, which forms the core of this system. It is very illogical to compare two people with different jobs with big difference in the way they contribute by their performances.
How can two people be compared and ranked who have such different working methods and job titles. How can you compare a person who works as an informal administrative center leader to the technically brilliant but interpersonally amateurish person as they both works effectively in their own domain and contribute accordingly. It is something like comparing apples with oranges.
- This is quite true that the ranking system instigates the competition in company a bit, and affects the environment of company in a degrading way to a very large extent. It unintentionally encourages such actions and behaviors in organization, which a sound organizations should not have.
It surely makes people more productive by giving them better, smarter opportunities but in their thirst to win race they jump over less hard working fellow colleagues in order to entertain more rewards. If the ranking system is strictly followed it can lead the employees to engage in various activities which are not in favors of the progress of organization like with-holding of key information, hoarding of resources.
Employees may become self-centered and perform self-serving actions. And they may not like to work in team and help others leading to reduction in teamwork.
If you wish to create a good and a sound organization, it is very important to install good quality performance appraisal methods in it. Ranking method is only one of the ways of measuring performance of employees; it is not the final say. It bears and breeds various ill effects. If only ranking system is given the top hand in judging the employees performance it will surely lead to back biting, secretiveness, resource hoarding, dissentment, disputes and lack of trust within the organization.