The Value and Role of Forced Rankings (Whether You Love'em or Hate'em)

"I LOVE forced rankings!" says Paul Hebert in a great post over at Fistful of Talent. 

I don't, necessarily.  Love them, that is.  But Paul presents a compelling case for the value of forced rankings, based on the fact that they inject constraints - and a different kind of thinking - into performance discussions.

From Paul's post:

We all have constraints in business.  Budgets are a constraint.  The economy is a constraint.  Competition is a constraint.  All of these constraints make you think differently and change how you make decisions.  Going through the process of ranking your employees makes you think about your staff differently and will allow you to look for ways to improve and change.  It may very well result in someone leaving the team or the company.  But, it may also result in a different training program, a transfer to another department or even highlight someone whom you didn't realize had a huge impact on your business.  You all know there is one person who quietly, behind the scenes, really does all the work but doesn't get any credit or even seek the limelight.

I realize that forced rankings have their negatives - but I also think that forced rankings are a way to eliminate the biases we have when you have the "good ole" boy/gal that is always fun to be around, but really never get's anything done.

Constraints force choices and trade-offs.  I will allow that this can be a good, necessary and even important addition to the performance measurement process, particularly with management groups that lack the discipline and intestinal fortitude to be truthful and fair in their assessment of subordinates. (I'm not, by the way, speaking in favor of Welchonian "rank and yank" here, but rather the use of forced ranking as a method to calibrate performance differences.)

When it is necessary, though, I prefer to see forced ranking serving as a compliment to - not a substitute for - performance management, which entails assessing performance against defined standards and expectations.  I can see forced ranking providing a helpful set of guard rails, for the management team that is inexperienced with - but needs to get up to speed on - making tough performance calls.  But I worry about forced ranking becoming a crutch, one that gets managers "off the hook" for the tough work of proactively managing employee performance.  You know, the whole drill of communicating expectations up front, talking about and coaching to them throughout the year, etc. 

The other thing that troubles me about forced ranking is that it tends to moves performance assessment away from an independent set of performance expectations to the discretionary relative judgment of the manager.  I appreciate that there are facets of every role that are difficult to translate into objective and measurable standards, but I believe it is important to dedicate the energy to doing what we can.  Having a clear set of standards and performance expectations for one's job is a motivating and empowering thing - it means that I have the ability to gauge and manage my own performance, rather than relying on my manager to do so for me.  This is one of the reasons that salespeople tend to have such high levels of engagement, commitment and career satisfaction - their compensation plans give them clear and explicit direction as to how their performance will be measured and rewarded.  I think we owe all employees our best shot at this information.

I really appreciate Paul's use of the concept of constraints to frame the issue of forced ranking.  While it still isn't a love connection for me - I find it helps me better appreciate where, how and why this process can add value.

Comments

[Wally Bock]

Both you and Paul have contributed thoughtful posts, Ann. Thanks.

Originally, forced ranking at GE was a way to shake managers out of rating most of their folks "above average" or "exceeds expectations." It did that, but then became institutionalized with forced ranking combined with "eliminate the bottom ten percent." It's doing that last part reflexively that creates problems.

You're spot on about not using forced ranking as a substitute for performance management. Performance management is the process. Forced ranking is a tool and it needs to be used effectively and appropriately.

Publically ranking performance can be effective in some workplaces. Carrier pilots have every landing rated and the ratings posted on a rank board. No one wants to be at the bottom.

But for some work groups, forced ranking simply doesn't work because it creates competition where you need cooperation. Then the ranking itself can be disruptive and not get at the issue of underperformance, failing on two dimensions.

[E James (Jim) Brennan]

Nothing good about Forced Ranking Distributions (FRDs), IMHO. Not even good as a constraint. They're like whipping your children to improve their behavior; there are so many better methods that you hafta be .... um... well, I'll hold my tongue, for a change.

How do you FRD an elite team of 3? What about hand-picked sections of PhD superstars? What if the bean-counter whip-approach suppresses achievement? (How can it NOT? when you decree that only x% are permitted to DoReallyGood?) FRDs pit employees against each other, rather than against the outside competition, because if you can sabotage your peer, you maybe snatch their high-score allocation, since performance is now only relative rather than objective.

Alternatives include self-adjusting merit-budget distributions, clear (only sometimes objective) value-adding criteria for ratings, flexing merit budgets per actual unit/department results, and the very simplest alternative is adding another one or two authorizing signature levels. Been ranting against this for decades, so someone can probably come up with an old list of my comments more complete than this short one.

[E James (Jim) Brennan]

By the way, my comments above are all directed towards forced PERFORMANCE MERIT rating policies, rather than towards management development, staffing levels, headcount planning, retention and career pathing.

Comp people tend to focus on the compa-ratio balance of incumbent and job. That's where FRDs can really mess up things.

When you wear the OD or the T&D hats, you look at rankings differently: you must sort through competencies and potentials, separating the wheat from the chaff in terms of who you keep and who you lay off or otherwise separate more tactfully. That truly is a relative decision process.

Many is the time a manager says, "I'm going to give you a lower merit score rating than Pat, who is hypersensitive and will walk if offended, but YOU be the last laid off if things go South." Performance appraisals rating the last/current year for merit increases are not handled same as life/death manpower/womanpower retention decisions. Sometimes your most valuable asset for long-term survival is not the erratic SuperStar but the steady reliable plodder who may not win the highest annual ratings but is fundamentally more essential and/or less replaceable.

[Ann Bares]

Wally:

Thanks for the comments and thoughts. I agree that the need/appropriateness of forced ranking is situational; I would be the last person to advocate for its use universally, but I can think of a number of organizations where it would add value and discipline to the performance assessment process, at least for a time.

Jim:

I don't disagree that there are many circumstances where forced ranking is a bad choice, but I have worked with enough management groups who are simply unable to assess and differentiate performance to see the value that this would add in helping them develop some discipline and perspective. I'd prefer to live in a world where this is never necessary, but unfortunately that isn't where I find myself most days.

Thanks for the comments!

[Michael Clancy]

Some years ago, I did a forced ranking exercise with my employees. The scenario: Everyone in the department (all levels) is fired at 8:00, and then all rehired that same day. Who would you hire back first and pay the most, then second, third, etc. until everyone was rehired? Each of my employees compiled their own list, and we reviewed them as a team. I then showed my ratings, and explained my rationale.

It was a very risky exercise. But, it actually worked very well as a team building experience. I suspect that after reading this, several HR professionals need to take some Xanax. But, I was a new manager with a relatively new team ... and it worked.

What I will never understand is using forced rankings as a way of forcing the elimination of employees. Under that system, a manager that did a perfect job of leading, motivating, and creating an outstanding team would be forced to break it up for some arbitrary percentage policy. This use of forced rankings is always a bad idea.

[Joanne Bintliff-Ritchie]

A problrem Ive experienced in iimplementing forced rankings is that it assumes all like ranked poeple are equal in their performance. What we found, even in year 1 but even more so over time, was that some departments did a far better job of selecting and developing staff. Their worst performers according to rank were far better than the mid and occasionally top performers in other departments. And better than what we saw in the market place. By under rewarding, or even terminating in ssome companies, a departments's worst performers you may be losing valuable people and replacing them with less talented people who also have no institutional knowledge or established relationships to everage. This system motivated managers to always keep a few poor perfomers they could continually rank at the botoom - although they moved them around a bit in the rankings, so they never had to punish their strong and best perfomers. This system may work well for a short period of time with an organization going through change from entitlement to pay for performance culture, but in my experience has more weaknesses than strengths for most situations.