Forced Rankings Suck

The first time I heard about the use of forced rankings, and the subsequent letting go of the lowest performers, something just didn’t sit right with me. And while this management approach was made more popular in recent years by Jack Welch when he was at GE, it was long before then that I first learned of it. In fact, I first learned of its use by Jim Pattison, one of the most successful businessmen in Canada. He had used forced rankings with his car salesmen in the early years of building his car dealer network.

Just in case you missed out on the basics of the forced rankings management approach, it works like this. Each manager, on an annual basis, is to rank all of his or her employees from the best performers to the worst. Then, the bottom 10 percent (or some set number) of employees are let go for not performing well enough. The idea is that with each year, the overall performance will improve as only the best survive.

Here’s my take on the use of forced ranking: It’s the worst method of improving performance in the workplace ever invented. In fact, it’s just plain stupid.

Why? Let me count the ways:

  1. It doesn’t improve the long-term performance of employees. In fact, it’s more likely to de-motivate employees and cause them to perform worse. Fear is not a long-term motivator.
  2. It assumes the bottom 10 percent, or 1 percent, or 20 percent, or whatever the cut-off point is are not performing. Is it not possible that all employees are performing at a high level?
  3. What if most of the employees are not performing? If that was the case, why only deal with the ones below the cut-off point, leaving the other non-performers thinking they’re doing okay?
  4. It assumes that the performance problem is the employees’ problem. What if it’s the manager’s fault, or a systems problem, or a lack of resources?
  5. The focus is on the people, and not the performance. When management focuses on people, and not on the performance of the employees, it can make the performance even worse.
  6. It does not tell you why the bottom performers are not performing. The focus is on the problem, and not the solution.
  7. It is usually tied to the employees receiving feedback only at the time of being told. In most cases, the first time an employee learns how he or she is doing is during the annual review period. At that time, the feedback is either “you survived” or “you’re cut.” Rarely is there feedback along the way for the employee to learn how he or she can survive.

Sure, Jack Welch is a brilliant executive. And sure, he made GE perform exceptionally well (certainly from a financial markets perspective). But there is always the exception to the rule, and no one is perfect. I wonder what the long-term impact of using forced rankings will be on GE. I wonder how well GE would perform had he not instituted forced ranking. (I’ve read of managers at GE who fudged the system to avoid being forced to let go good performers)

Forced ranking doesn’t work in the long-term. It’s a lazy way of managing performance. Don’t use it. It sucks.

Tags: ,

One Response to “Forced Rankings Suck”

  1. Dave says:

    I know this post is over a year old now – but I have something of value to add as a “#8”.

    The company I work for has had forced rankings for 4 years. We use the Jack Welch system as described above.

    It turns out that over a few years, the top people who are not in the top 20% end up leaving. With the “quota system” – of 20% getting the best rewards… those who are solid, smart workers that are in the next “grouping” (just under the top 20%) get frustrated that they are treated no differently than people scraping against the bottom 10% that they find more lucrative positions.

    In addition, maybe a #9. Managers are finding that they aim to hire people who will end up in the bottom 10% to retain their existing talent – and not try to hire someone better…