Forced Ranking is a method of performance management made popular by Jack Welch. It is similar to “the curve” many of us may have encountered in high school and college. Due to the popularity of GE and Welch many companies started using forced rankings. After perhaps some initial positive effects most companies find out that forced rankings as a performance management tool leads to more ill effects than it does positive steps.
According to Michael E. Kannell, in Ranking Employees Falls Out of Favor, (subscription needed to read the full article) Microsoft’s use of forced ranking is being blamed for its current malaise. Experience has shown that forced ranking causes employee morale problems, may result in unnecessary and even detrimental turnover, and inhibits team work. I have never been a fan of forced ranking and have always thought it a bad idea.
So how did it get started in the first place and why did it even get started. I think it got started because companies have always been bad at teaching managers and supervisors how to conduct a performance discussion. We have used poorly constructed tools, did little or no training, did not hold managers accountable for the management of their employees performance and then proclaimed performance appraisal does not work.
Forced ranking got introduced to “force” managers to evaluate their employees in order to decide who the better employees were. Then, like at GE, you get rid of the bottom 10%. This method makes comparisons between employees and not necessarily against goal accomplishment. You could theoretically have a group of employees none of whom achieve their goals, yet you still rank them from best to worse and then fire the worse. Is that really a good way to manage performance? Not in my way of thinking.
To me performance management consists of:
- Setting performance goals with each employee;
- Conducting ongoing discussions with employees on a continual basis about their work towards achieving those goals;
- Correcting behavior and performance on an as-needed-basis;
- At the end of the appropriate period determining if goals had been achieved in the manner agreed upon.
If the employee achieved their goals I am happy. If they did not then we are determining what other course of action is needed. At no point do I have to say they are better or worse than another employee. If all my employees achieve their goals then I am very happy. There is no need for me to say one employees was the best or the worse. They either achieved or did not. If everyone did well I don’t have to fire anyone and I am grateful I have a high performing group. NO forced choice to determine that I have to fire someone. If they are not achieving their goals there still is no need to, nor value in, comparing them to another employee. That is not constructive. If I have to terminate one or more it is due to their lack of goal achievement and not how they compare to someone else. I have the performance numbers to rely on in order to make my decision.
To sum this up: I am not a fan of forced ranking. Rather I am a fan of goal setting, honest, open, constructive and frequent communication. I do think you may have to use some sort of ranking method in lay off situations, but it should be based upon performance data and not comparisons to other employees.
What about you? Any fans of forced ranking?