Arrow Electronics Article

HBS Atricle on Compensation and Performance Evaluation at Arrow Electronics:

The compensation and performance evaluations at Arrow Electronics sound like a complete mess.  Managers are pressured to average 3’s and the whole company knows it.  The manager tells their staff, “The reason I’m giving you all 3’s is because that’s all I’m allowed to do, even though personally I feel that you are going above and beyond.”  So the staff walks out upset and disappointed.  The system is set up to fail.  Who gets a 5?  How does that manager know that that employee fits in the 5% of top tier employees across the whole company?  What happens is that everyone sees the leadership as disengaged and disconnected.  As a manager, if you don’t already know who your best employees are, then you’re out of touch with them.  It is possible to have more than 5% of your staff working well above target.  I noticed that on table 1 in 1995 management obviously felt pressure to limit their ratings to anything except 3’s, then in the following years, low and behold, the numbers reflect the goals.  How accurate can that be?  This is a joke and you can sense the tension that Kaufman was feeling, knowing that the process wasn’t working.


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