Ranking Your Employees

What are differentiation and forced distribution methods for team management? How do they improve your business's bottom line? Read Here!

Why Managers Should Use Differentiation and Forced Distribution to Manage Their Teams

As a manager, effective team management is critical for transparency, efficiency, reliability, productivity, and performance.?Doing these things can then lead to organizational success. As a manager, you must excel in various areas of team management, such as goal setting, task delegation, employee differentiation, and forced distribution (ranking).

You'll also need to provide consistent feedback to your team members to keep them engaged and align their tasks with the business goals. Successful organizations use various strategies to achieve operational excellence, such as improving overall employee management strategies through:

• Personalization
• Simplification
• Transparency
• Evaluation
• Differentiation
• Forced distribution

Research shows that managers that focus on creating a positive organizational culture boost their revenues by 400%. According to Business-2-Community , managers that follow an employee engagement approach have higher productivity levels, with 41% reduced absenteeism and 59% less employee turnover.

Likewise, Team Stage statistical data highlights that 97% of employees believe that lack of team management, communication, and collaboration negatively impact a task or project. On the other hand, the Gallup survey shows that well-structured, connected, and managed teams allow organizations to increase their bottom line by 21%.

According to SHRM , low-performing employees are disastrous for organizations, leading to significant cuts in productivity, revenues, and profits. However, managers can overcome these problems by implementing differentiation and forced distribution methods.

Not only do these strategies standardize the workplace, but it also plays a crucial role in improving operational excellence. I will discuss employee differentiation and forced distribution methods and their benefits for managers to create winning teams. Read on!

What are Employee Differentiation and Forced Distribution?

Differentiation is a sophisticated process that requires a manager to identify and reward employees based on their performance, productivity, engagement, and impact on the company's overall bottom line.

However, differentiation is time-consuming for managers because ensuring transparency and dealing with employees' concerns is daunting. As a manager, you must identify and evaluate employees' actual performance behaviors. Four stages of employee differentiation are:

·??????Performance evaluation

·??????Role segmentation

·??????Identification of critical team members

·??????Defining competencies for each role

Differentiation and forced distribution go hand-in-hand, allowing managers to create a transparent performance management system. Forced distribution, also called bell-curve rating or stacked ranking, is an employee performance evaluation method allowing managers to rank employees in different categories, such as "poor," "good," and "excellent."

It is an excellent strategy that improves the team's performance by creating a competitive environment in the workplace. Managers can allow their teams to reach new heights in the market and stand out from the competition regarding talent recruitment and retention.

The Importance of Differentiation

Organizations' human resource (HR) departments develop, implement, and standardize HR policies to streamline employees' performance. However, the traditional approach prevented companies from achieving high productivity levels.

On the other hand, companies that implement a strict differentiation strategy based on employees' roles, competence, and performance lead to more streamlined talent management, transparency, competition, and productivity.

Shapes the Business Strategy

The employee differentiation strategy can shape your business strategy and optimize various aspects of the company's processes to achieve operational excellence. For example, if you run a digital marketing agency, your company's reputation relies on providing your clients with data-driven results.

So, as a manager, you are responsible for evaluating each team member's performance and determining who generates optimal outcomes. For instance, you can identify whether the PPC expert performs better than the social media marketer or SEO specialist.

The PPC expert becomes a more critical role at your digital marketing agency than a social media marketer or content creator if their monthly performance is up to the mark. Thus, you can use valuable insights to reshape your business strategy and focus on high-performing team members.

Improves the Bottom Line

Implementing an employee differentiation strategy is an excellent way to reduce costs and increase profits. For example, a digital marketer who saves your company thousands of dollars on digital tools is more important than an employee who requires more resources and produces less-than-average client outcomes.

Therefore, employees that align their working strategy with the company's goals are more valuable. Cost-cutting measures are essential for your business to reduce expenses and increase profitability. Using an employee differentiation method based on cost-cutting can prevent your business from experiencing financial distress.

The Importance of Forced Distribution

The forced distribution method requires managers to categorize employees into three groups: "A," "B," or "C." Remember that the "A" group has the most motivated, passionate, engaged, committed, and skilled employees. These employees make up the top 20% of team members.

Employees categorized in group "B" are less motivated and engaged than group "A" workers. However, this 70% of the employees in the team or department positively influence the overall performance. They are the guts of your business, and you want to keep them.?On the other hand, employees in group "C" make up the bottom 10% and have low performance.

Creating a reward system for the top 20%, providing training programs for 70% to improve performance in the future, and implementing a coaching plan to either improve or walk out the door for the bottom 10% are critical measures managers can take to streamline the process.

Streamlines Performance Management System

Although most employees consider the "forced distribution" brutal and unethical, this strategy helps an organization improve its performance management system. It allows employees to understand where they stand and what they need to do to improve their performance.

Forced distribution is critical to creating a well-structured employee management system, allowing team members to understand their workplace roles, competencies, and statuses.

Enhances Productivity and Performance

Forced distribution enables managers to create a more competitive environment in the workplace, encouraging employees to identify their weaknesses and determine areas of improvement.

It helps you identify potential talent within your company and provide training to employees for continuous improvement, a critical element of operational excellence.

Final Words

More rationalized and standardized workforce management leads to better problem-solving, satisfies team members, improves personal growth and innovation potential, and less burnout. However, achieving productivity goals requires a manager to implement differentiation and forced distribution strategies.

·??????What problems have you experienced when incorporating these strategies in your organization?

·??????What strategies did you use to overcome employee concerns?

·??????Is there a more balanced way to improve the performance of the bottom 10%?

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