The Downside of Employee Rankings
“In the age of big data,” said Max Nisen, “it’s possible to rank employees in entirely new ways.” But openly comparing workers “with the intention of creating friendly competition or transparency” can easily backfire, “depending on a company’s culture.” A new study of how firms use performance data examined a trucking company “in the midst of adopting Toyota’s famous lean principles,” which emphasize collective outcomes over individual results. Researchers found that posting a leaderboard comparing employees’ productivity “had vastly different effects” at various offices.
At locations that had maintained the “original, more individualistic culture,” posting rankings “boosted performance substantially.” But at sites that had implemented the Toyota system, rankings “had the exact opposite effect,” resulting in “more wasted fuel and more time spent idling.” The researchers concluded that the disparity “came down to the change in mindset”: Workers who were told they would be “rewarded for collective achievement” altered their efforts to avoid hurting co-workers and creating “schisms in the team.” So if a company’s culture already emphasizes collaboration, the boss “may want to think twice before putting everyone’s performance data out in the open.”
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