The main purpose of ranking employees is to induce competition to spur performance ("Ranking employees against one another unhealthy" by Mr Tan Kin Lian; Thursday).
Unfortunately, this may also induce undesirable behaviour as described by Mr Tan.
Still, it is necessary to categorise employees periodically in order to maximise operating efficiency. The question is how to do it fairly and respectfully.
Employees cost money but they should be treated as assets.
Different assets have different values in terms of generating returns, and so do different employees.
In businesses where competition and survival are the order of the day, it would be wise to classify employees in the following categories:
- Competitive employees: Those who provide the cutting edge to the company to fight competitors.
- Progressive employees: Those who prepare the company for tomorrow's businesses.
- Competent employees: Those who enable the company to operate today's businesses.
- Under-contributing employees: Those who barely or inadequately contribute to their current jobs.
- Non-performing employees: Those who perform no useful function and take more from the team than contribute to it.
Competitive employees generate the most returns and should be rewarded the most.
Non-performing employees are essentially liabilities, and should either be converted to assets in one way or another, or removed from the team.
A system is needed to identify those who possess attributes that make them competitive, progressive or competent.
Not managing your employees like assets risks their becoming liabilities down the road.
Unlike fixed assets whose specifications are permanent and whose outputs tend to degrade over time, the wonderful thing about employees is that with the right job, coaching, exposure, challenges and rewards, they can exponentially upgrade their characteristics and performance, to the benefit of the company as well as fellow colleagues.
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