Jack Welch, the ex-CEO of GE, who rocketed GE (arguably) to its current successful position implemented an interesting proposition in his company. Top 20% of the managers would get bonuses/ other accolades, while bottom 10% would be fired. This is exactly what relative grading is isn't it?
Now consider the following scenario: The entire population competes for some sort of prize. Let us also assume that there are a specified number of people who can this prize. We can then divide the competition into several stages. At each stage, the candidate is compared to his/ her peers and the weak ones are eliminated. We finally come to the winners who are now the best among those who have competed for this prize. Sadistically, another stage is introduced where in those who won the prize must compete for the over-arching trophy. Effectively, what I have done is described the process in IIM. The students at IIM are the best of the population in India (barring certain reservation exceptions). Yet they are forced to compete amongst each other for a good gpa.
Reverting to GE, what happens when you have the best managers in your company? Do you still fire the lowest 10% among the best? Doesn't it make more sense to have some sort of absolute criteria then? Coming to the IIM's, does it really make sense to have someone obtain a 95% on his/ her exams only to be awarded a C? Perhaps it is more rational to ensure an absolute criteria along with a relative grade - all those who get above 90% are assured an A but whether someone gets an A or an A- is graded relatively.
Furthermore, forced relative grading brings politics into the picture. If X is someone's competiton, then rationally speaking, he/ she would try and backstab X to ensure that he/ she gets the best chance at the coveted over-arching trophy. Friendship deteriorates, judging based on gpa and externalities rather than personalities happens, segregation of the population into unwanted strata results, and the seeds of discord and jealousy are sown.
Perhaps it is time for the IIMs to re-think their policy... ?
Now consider the following scenario: The entire population competes for some sort of prize. Let us also assume that there are a specified number of people who can this prize. We can then divide the competition into several stages. At each stage, the candidate is compared to his/ her peers and the weak ones are eliminated. We finally come to the winners who are now the best among those who have competed for this prize. Sadistically, another stage is introduced where in those who won the prize must compete for the over-arching trophy. Effectively, what I have done is described the process in IIM. The students at IIM are the best of the population in India (barring certain reservation exceptions). Yet they are forced to compete amongst each other for a good gpa.
Reverting to GE, what happens when you have the best managers in your company? Do you still fire the lowest 10% among the best? Doesn't it make more sense to have some sort of absolute criteria then? Coming to the IIM's, does it really make sense to have someone obtain a 95% on his/ her exams only to be awarded a C? Perhaps it is more rational to ensure an absolute criteria along with a relative grade - all those who get above 90% are assured an A but whether someone gets an A or an A- is graded relatively.
Furthermore, forced relative grading brings politics into the picture. If X is someone's competiton, then rationally speaking, he/ she would try and backstab X to ensure that he/ she gets the best chance at the coveted over-arching trophy. Friendship deteriorates, judging based on gpa and externalities rather than personalities happens, segregation of the population into unwanted strata results, and the seeds of discord and jealousy are sown.
Perhaps it is time for the IIMs to re-think their policy... ?
