Who Loves Forced Rankings in HR?

2 Responses for "Who Loves Forced Rankings in HR?"

1. Nagesh Belludi February 28th, 2009 at 9:57 am 1

   In intent, the forced ranking system (or the “20-70-10 system” and “rank-and-yank system” in Jack Welch/GE terminology) is an excellent method for rewarding top performers and setting specific deadlines for improvement for poor performance. Despite this appeal, the system has several drawbacks.

   Most organisations that implement forced ranking systems tend to experience a lot of resentment to the system— especially about the requirement that 10% of the people be ‘purged’ or ‘yanked’ (poor choice of words) out of the organisation every year. The basic idea behind this 10% distribution is that the people here probably don’t fit in the context of the current endeavours of the organisation or have established a pattern of contributing little in the recent past. By forcing an employee into this 10% category, a manager is essentially doing him/her a favour by hinting that the person take up a job that fits better with his/her interests and capabilities, whether in another sub-organisation within the company or in a different company altogether. In practice, though, people in the 10% category are usually terminated automatically only if they have been in the 10% category in two consecutive ranking cycles.

   Quite often, the forced ranking system is poorly implemented. Sometimes, the upper-level management simply ‘copy’ the system because they might simply adore Jack Welch and the transformation he brought about at General Electric. Successful implementation of forced ranking requires a thorough organisational culture and a framework of managerial practices. Three of these essential practices are: (1) a great recruiting, mentoring and retaining system that develops a great talent pool to diminish the efforts of losing 10% of the people every year, (2) an active system of performance feedback and recognition that the company’s leaders need to tirelessly advocate, and, (3) a management process that sets clear expectations for the performance of people and ‘measures’ them against these expectations. Without these initiatives in place, the forced ranking system boils down to a mere popularity contest.

2. Dave Crisp March 1st, 2009 at 7:25 pm 2

   Thanks Nagesh, you’ve given a good overview of how forced ranking is supposed to work. The challenge with any program that ‘only works if there’s great recruiting, etc., active performance feedback and clear management expectations’ is that there often isn’t… or at best, it’s spotty.

   In my own work I found that if I kept people focused and coached performance, the top ones exceeded my expectations every time… and mostly the less effective would flounder and many dropped out on their own. At both ends I could reward or say goodbye without much effort to specifically identify a top 20% or a bottom 10% at review time. Instead the dropouts occurred as they realized they were falling behind and the exceptional people got interim raises, promotions and perks along the way. Day to day management and leadership, I find, usually beats a ‘program.’