Forced ranking

“Forced ranking” is a controversial performance management tool, sometimes known as “rank and yank”, “stack ranking”, or “bell curving”, which requires managers to evaluate the performance of their employees against one another. This comparative method of appraisal categorizes employees into a pre-determined distribution rank, typically into top performers, average performers, and underperformers.

The rationale behind forced ranking is to create a high-performance work culture by identifying and rewarding top-performing employees while encouraging low-performing employees to improve. It is believed that this method eliminates leniency and central tendency biases in performance appraisals and provides a clear picture of employee performance.

Forced ranking gained widespread attention in the late 1980s and 1990s when it was adopted by leading corporations like General Electric under the leadership of Jack Welch. These companies reported increased productivity and profitability after implementing forced ranking, attributing these gains to a more competitive workforce and the identification and elimination of low-performing employees.

However, forced ranking has also been criticized for potentially fostering a competitive and cutthroat environment, which may undermine teamwork and collaboration. It could also lead to demotivation and decreased morale among employees who consistently fall into the lower ranks, potentially leading to high turnover. Furthermore, this system may not account for fluctuations in performance due to factors outside of the employee’s control and could lead to perceived unfairness in the appraisal process.

Another concern is that forced ranking may encourage homogeneity, discouraging diversity and inclusion, as managers might favor those who are similar to them or fit a particular ‘mold’. Additionally, it could lead to a loss of institutional knowledge and potential if the system consistently removes those ranked at the bottom.

To mitigate some of these potential negatives, some companies use a modified approach, applying forced rankings only to certain segments of their workforce or using it as a diagnostic tool to identify trends and provide targeted training and development.

In conclusion, while forced ranking can be a powerful tool for driving performance and identifying top talent, it must be used thoughtfully and carefully. Organizations considering its use should weigh the potential benefits against the risks, considering their unique culture, goals, and workforce composition. Proper communication and transparency about the process and criteria are also crucial to maintain trust and fairness in the system.