Why might a company use a forced distribution method for employee performance ratings?

A company might use a forced distribution method for employee performance ratings primarily to encourage competition among employees. This approach involves ranking employees against each other, typically assigning a certain percentage to each performance category, such as top performers, average performers, and underperformers. By structuring evaluations this way, organizations aim to motivate employees to strive for higher performance levels, as it promotes a competitive environment where individuals understand they must distinguish themselves from their peers to receive higher ratings.

This method can create a sense of urgency and drive among employees, as they are aware that, in order to succeed and potentially receive bonuses, promotions, or other rewards, they must not only perform well but also outperform their colleagues. Thus, the forced distribution method can lead to enhanced productivity and a stronger focus on achieving business objectives.

While other options may touch on aspects of performance evaluation, they do not align with the primary reason for employing forced distribution. For instance, ensuring ratings are based on subjective criteria or providing lenient assessments do not reflect the competitive nature fostered by this approach. Similarly, reducing personal biases, while an important goal in performance evaluations, is not the central purpose of forced distribution, which tends to emphasize ranking rather than objective appraisal.