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Why Employee Ranking Can Backfire; by By PHYLLIS KORKKI, NYTimes

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Big data has captured the imagination of many corporate executives, but it has its limitations. When evaluations are turned into numbers and used to rank employees from best to worst, it crushes motivation.  

Big Data has made it possible to measure employee performance more thoroughly than ever. The idea is that lower-ranking employees will strive to improve, while higher-ranking ones will work to maintain their edge.  Iwan Barankay, an associate professor at the Wharton School at the University of Pennsylvania. sought to test this assumption in a study of 1,500 furniture sales workers that he conducted over three years in North America.One group of sales workers was shown how their sales ranked compared with their colleagues. Another group was not shown a comparison, but only their individual results.

"Professor Barankay found that the sales representatives who did not know how they ranked achieved higher subsequent sales than those who were aware of their comparative ranking. The results of the workers who had received high rankings neither improved nor worsened.

Human nature combined with simple math caused the lower-ranking workers to falter, according to Professor Barankay. Most people optimistically assume that they are above average in their performance, he said. But real life is not Lake Wobegon, and most people, when measured against one another, will inevitably rank as average or below average. For these people, seeing their rank is demoralizing, causing their performance to wilt."

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