Thoughts on Forced Ranking

Kevin Berchelmann from Triangle Performance has an interesting post up about forced ranking, and how just because it works well in one organization we shouldn't assume we can translate it into our own organizations with the same results.  You can read his post here.

Forced ranking, for those of you who haven't heard of it, is when performance reviews are "stack ranked" with the results fitting a distribution curve.  In a typical forced ranking scenario, an organization might require that 10% of the workforce gets a "failing" score and only allowing 20% to get an "exceeds expectations" score for example.  For those of us who remember being graded on a curve in college, it's the same thing for the workplace.

As Berchelmann points out, companies like GE are legendary for forced ranking systems and much success is attributed to them.  Microsoft also used force ranking extensively but has softened the approach over the last few years.

What are some situations when you might want to think twice about using forced ranking?

1) Tight Labor Markets -  If you are ejecting the bottom 10% of your workforce each year as a matter of strategy, you'd better know that you have replacement staff in the wings.

2) Collectivist or Team Based Cultures -  Some might disagree with me on this one, but one of the unintended concequences of a forced ranking system is that it creates a very competitive environment.  Unless managed very carefully, you may end up rewarding individual behavior that doesn't benefit the larger team.  So highly cooperative corporate cultures may be harmed by a forced ranking system.

3) Limited Employee Development -  If you are going to used forced ranking, you'd benefit from having an extremely robust employee development program.  If you are ranking employees on a curve but not giving them tools and chances to improve, you're just setting people up to fail.

I think that forced ranking may be a strategy that works well in certain cases, but it is also a high risk strategy.  What Kevin indicated (and I strongly agree) is that when we take a certain "best practice" out of a company and try to impose it in our own organizations - we shouldn't be surprised when we get different results.  You wouldn't hack the electrical system out of a tank and put it into your Toyota would you?  Then why do we treat our organizations that way?

Have a great weekend all.

Comments

[bombaydosti]

Dear Cheri,

Oh! The first thought is, finally!!!!
Not always mr. Welch!
But I was wondering,what is the other way around? As when we do the bottom boxing, we are also able to finance the top boxers, because of the same. And force fitting,very similar performance, and in a unit where there are people from different functions, it becomes difficult to even compare their performance.
Thanks for this!

regards
preethi

[D. Kevin Berchelmann]

Your "think twice" situations are spot on, though the current labor market may be more conducive than in the recent past.

I'm not certain that forced ranking creates a more competitive environment, per se, but it likely DOES foster a good deal of narcissism among employees (I mean for a difference here, though it may seem to be splitting hairs).

And your employee development comments are right on the mark. Most people gloss over the fact that, like GE, companies successfully implementing and managing forced ranking have significantly more robust development 'machines' than other organizations.

That bottom 10% we hear about getting whacked has had incredible professional development opportunities before that moment. Never lose sight that the goal of forced ranking is NOT to upgrade staff, but to improve performance.

Subtle but distinct difference.

Kevin Berchelmann