Performance appraisal continues
to be a controversial subject among managers, supervisors and
employees. In that context, Steve Bates addresses the concept
of "forced ranking." He suggests that this issue is,
"...probably the most controversial issue in management
today", and is currently being used by at least 20 percent
of Fortune 1000 companies.
What is forced ranking? It is a system
that requires supervisors to compare the quality of each employee's
work not against performance standards, but instead against each
other. In other words, how does Joe compare to Lilly? How does
Lilly compare to Marge? By comparing employees to one another
instead of judging them against performance standards, forced
ranking -- also called forced distribution or "rank and
yank" -- seeks to identify the best and worst performers
within an organization. This article illustrates pros and cons
of using such a system, as well as discussing different ways
it can be implemented.
According to champions of the method, forced
ranking can be the best method of identifying and promoting top
employees, while simultaneously eliminating the "dead wood"
of the organization. This system has been most successful in
highly competitive, results-oriented companies like General Electric,
where former CEO Jack Welch insisted that each year the bottom
10 percent of the work force be identified and eliminated. In
this way, it may help force managers to hold employees accountable
for their performance. "If a company wants to jump-start
a genuine leadership development process and move quickly toward
muscle-building the organization, forced ranking is the best
tool around," says Dick Grote, president of Grote Consulting
Company in Dallas.
Opponents of forced ranking point out that
the process can be "arbitrary, unfair, illegal, a morale
killer and death to teamwork." Often, they point out, managers
may be forced to identify poor performers when none actually
exist. This can lead to counter-productive hiring practices.
For example, Robert Rogers, president of consulting firm Development
Dimensions International, based in Bridgeville, Pa., describes
an employer who indicated that,
...managers in his organization are carrying
poor performers throughout the year so they can have someone
to put in the 'fails to meet' bucket or, worse yet, hiring marginal
performers toward the end of the evaluation period so they have
someone to fire at the end of the year."
Forced ranking may also lead to lawsuits
alleging discrimination against minorities, women, or older employees.
When forced ranking places a disproportionate number of these
employees in the lowest categories, it can be illegal. Both Goodyear
Tire and Ford have faced such lawsuits, and many more are likely.
There are several different ways of implementing
forced ranking programs. All employees may be ranked, or just
top- and mid-level managers. Some companies rank employees from
1 to 100, for example, while others group workers into one of
several classifications ranging from best employees to worst.
Some companies use a rigid percent-based system; others a more
flexible bell curve. In any case, opponents and proponents agree
that HR professionals need to be involved in the debate: either
"proposing better alternatives" to forced ranking or
explaining "how to implement it and the consequences for
not doing so."
As we noted, this is a controversial appraisal
process, one which can have a severe impact on employee morale.
The author's effort provides us with insight into all sides of
this issue.