The Increasing of Performance Differentiation


Recently, the company has been emphasizing on increasing performance differentiation, which has caused some unrest among employees.

What exactly does increased performance differentiation mean?

It suggests that managers should provide subordinates with more diverse performance ratings, focusing on high and low performance, rather than the generally satisfactory ratings that employees previously received.

Why does management choose to do this?

Here are a few main factors:

• Although the company’s business is still growing, the growth rate has gradually declined and has not met the expectations of the management. The company hopes to incentivize employees so that the main business can return to a high-growth track, or to find a new business direction to create new growth opportunities. • The number of employees has expanded to a large scale, with some employees adopting a laid-back attitude, a phenomenon known as “lying flat”. The company hopes to identify these employees, provide them with guidance to inspire progress, or invite them to resign.

What would be the impact of this approach?

• For high-performing employees, as they receive higher performance ratings and income than peers, they will be more actively working, creating more value, thus increasing work efficiency. • For low-performing employees, as they did not receive recognition from the company and face risks of job counseling or unemployment, they may feel frustrated and lose their enthusiasm for work. If their situation does not improve, they may choose to leave or be laid off by the company. • In terms of team collaboration, the large differences in employee performance may lead to competition between employees, resulting in them refusing to share information and participate in open collaboration. This could increase the company’s collaboration costs and lower work efficiency. • In the management environment, due to the subjectivity of performance evaluation, employees might focus more on managing upwards, which could lead to bureaucracy and hinder effective leadership.

Overall, this approach has both advantages and disadvantages. The eventual efficacy, good or bad, depends on the specific execution process.