Monday, 16 September 2013

The ABC’s of Forced Ranking

No matter where you go employees hate forced ranking – the system by which all employees are ranked as A Players (Top 20%), B Players (Middle 70%), and C Players (Bottom 10%). This is especially so when forced ranking is combined with “rank and yank”, meaning the automatic dismissal of the C Players. Is this just a case of employees being afraid of a cutthroat form of performance appraisal, or do they have a legitimate beef?

We can credit Jack Welch with popularizing the concept when he ran GE to such a great performance record. From his perspective, Forced Ranking is a humane system of performance management (Wall Street Journal in a January 2012). Approximately 60% of Fortune 500 companies still use the system, though some have expanded to five categories over three. Many also insist they do not establish quotas for each category.

And yet, managers being human beings (most of the time), it seems unlikely that the practice of forced ranking doesn’t force them to identify their A, B, and C Players pretty sharply. This forces us to consider a conundrum. If a manager is successful in getting his or her employees to meet or exceed their team objectives, is it legitimate to assess some of those employees as poor performers? Presumably, a manager who is achieving such success is holding people accountable, removing obstacles, coaching up performance, and doing everything necessary to produce desired results. What does it say when, at the end of the year, that manager must stand up and declare some employees to be crucial while others are expendable? What does that do to the group in question?