NCPA - National Center for Policy Analysis

Some Employees Fighting Job Grading

March 19, 2001

A growing number of companies are turning to grading systems as a way of ensuring executives and managers evaluate employees honestly and make clearer distinctions among them. Under traditional systems, managers tended to rate those under them as above average. The grading system forces them to identify some employees as low performers.

The change has prompted employees at three large companies to file lawsuits charging that the procedure is unfair.

  • Managers, professionals and sometimes lower-level employees are ranked from best to worst -- as in a bell-curve -- and then that ranking is used to determine pay and sometimes whether to fire someone.
  • But employees at Microsoft, Ford Motor Co. and Conoco contend in their suits that the system favors some groups of employees over others -- white males over blacks and women, younger managers over older ones and foreign citizens over Americans.
  • Another objection is that, across a company, people who belong to a particularly talented unit will suffer if a certain number of them must be given poorer grades than they would get in another unit.
  • Ranking or grading employees has been common at many technology companies, but is now spreading more broadly -- in part, as a tool to use as layoffs spread.

At General Electric, supervisors identify the top 20 percent and the bottom 10 percent of their managerial and professional employees each year. The bottom 10 percent are not likely to stay.

Source: Reed Abelson, "Companies Turn to Grades, and Employees Go to Court," New York Times, March 19, 2001.


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