How Many People Still Use Forced Ranking?

Keith Perry's Profile

There seems to be growing momentum against Forced Ranking and its ilk...

http://money.cnn.com/2006/07/10/magazines/fortune/rules.fortune/index.htm

and

http://www.technewsworld.com/rsstory/75628.html?goback=%2Egde_35866_member_135046255

among others.

When managing people, is there anyone that has something good to say for this process?  Are there ways of implementing it that work?  Are there people still implementing this that find it useful?

Alternatives: What do you do?

Answers

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We use a "guided distribution" in a population of 50 or more employees. However it is widely misunderstood and misinterpreted in the organization so I would conclude it is not a good idea. However performance has to be relative to some extent so at least some callibration needs to take place in between teams.

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Keith - Perhaps the issue is not with Jack's methodology, but it is with the current generation and its desire to make its own mark on business. I am 29 years old, so I consider myself to be part of this generation. I am however old for my time because I am a proponent of Forced Ranking-type techniques. This is more than likely due to the people I have reported to in my brief seven year professional career and their training techniques.

Jack did not institutionalize failure, rather his methods are not relevant any longer due to the technological age of working from home, cloud computing, we-can-succeed-better-as-a-team mentality. It is no longer considered the fact that the CEO has the only great ideas, young professionals want validation that their education and ideas means something. If young professionals do not receive that validation, it will be sought out elsewhere. This may be why young professionals are always on the job hunt.

Since Jack's methods are no longer relevant, overall, those that use his leadership style are having issues connecting with my generation, thus these writers think Jack has failed.

Did you see or hear of the recent graduation speech where students were told they were not special? If not check it out: http://www.youtube.com/watch?v=_lfxYhtf8o4. People in my generation have been treated in ways described in this video. The video overall is not negative, although it seems like it at first.

Younger folks want to do things their way, which is why corporations are having a type of landscape change in that suits and professional dress are turning into more of a casual dress with khaki's, polos, etc.

I saw a quote posted to Forbes months ago relating to this generational shift in business: "Older generations are living proof that younger generations can survive their lunacy" - Cullen Hightower

Corporations are changing thanks to younger generations and their "lunacy", but we have survived so far.

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Keith - I think forced ranking assumes a large homogeneous workforce, no? Most employees today view evals with a degree of cynicism, however well-intended the design.

A bit off topic, but formal process or not, if you ask a CEO to name the people he cannot run his business without, he'll be able to rattle them off for you on the spot. I suspect most would be surprised at how short that list is.

Chris - careful my friend! Some would say this current generation thinks they should be handed large pay and have free-rein and unlimited input when they have no experience to draw upon. (I'm 37 by the way and learning something new every day).

Whatever happened to paying your dues? No one seems to want to do, well, the job they were HIRED to do anymore.

That being said, I believe every company should have a forum conducive to the input of ideas by its entire employee base. Creativity in performing our jobs all across the spectrum should be encouraged and supported. There is no monopoly on good ideas, and no company should cut itself off at the knees by ignoring this fact...

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Ken - You are exactly right, most people in my generation, including recent graduates feel that way. That is one of points I wanted to make. For instance, a company I used to work for hired three staff accountants each with MAcc's, but had absolutely no experience. They came in expecting their MAcc's to earn them $40+. They complained about their pay, and the work they did.

You are spot on with my generation. That is one reason I said I was old for my time. I had a great opportunity of being reminded by a few successful finance people that I had to pay my dues. Now I follow intelligent people in business here on Proformative, Twitter, and continue reading continuing education materials. As I pay my dues, I continue to seek wisdom so I can be more ready for my future position.

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Done correctly, ranking can be a benefit for the company and employees. Following Chris’ theme, as human beings we need to know how we rate against each other. I believe it is natural instinct to understand our rank in life or job and aspire to be the best – at something. The U.S. Military follows this idea through the use of rank, maybe not with absolute integrity or accuracy, but it works, most of the time. We all need feedback to understand our position in order to prevent chaos and move the company forward - stack or forced ranking can fill that need.

I have worked in large and small companies where ranking, if done correctly, works well. Regardless of company size, as a manager, I need to accurately evaluate performance of my team and understand who is ready to receive more responsibility. Low performers need to improve or get out. That measurement is performance based metrics against a peer group, like it or not. To Ken’s earlier point, most managers are doing this with or without a formal system, so why not share the results with the staff so they can improve on their status, if they desire?

A CEO friend of mine, Rob Sher, makes a good argument for stacked ranking in his Forbes blog ( http://onforb.es/NiS4mL ) stating simply that “Stack ranking is at its heart, an ordering of items, based on a set of criteria.” If you use the correct criteria, you get results.

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There are two advantages I see in this process - first, it will spur further development and improvement as one cannot "rest on their laurels", since should they do so while everyone else improves they will slip down in the rankings.

Second, ratings systems seem to generally suffer from "ratings creep" (everyone winds up "above average") and differences among raters (hard graders vs. easy graders).

Example, if Employee A is the top performer in their department but has a "hard-grader" boss, maybe they get a 3 out of 5 on their review, and thus receive a median bonus. Employee B, on the other hand, is a median performer in their department (some are better, some are worse), but by virtue of having an "easy-grader" supervisor gets a 3.5 on their review. In this situation the median performer B ends up with a higher bonus than the top performing A.

Forcing the curve helps in this situation somewhat (not perfectly) since the easy-grader needs to rank their employees by the same percentages as the hard-grader, and thus A becomes a 5 out of 5 (since they were a top-performer) while B becomes the 3 out of 5 (since they were a median performer), and thus rewards are more in-line with performance across the company.

Obviously there are advantages and disadvantages, but since the question asked to identify benefits this is what was focused on here.

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Define the job. Measure performance against the job definition. It's okay to have a Team of winners.

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The issue is that forced ranking is rarely objective. The lack of objectivity due the variety of view points of the person(s) doing the ranking and the variety of job descriptions guarantee an unsatisfactory outcome. In my experience it’s rarely been applied in an effective manner. It degrades to situations where the actual rating and performance feedback is colored by the ranking which unfortunately in many cases is established subjectively. This reverse justification results in the employee receiving feedback that doesn't match the performance and is therefore not credible or instructive.
If you must force rank to manage compensation then do so and leave it separate from the feedback. In my opinion, it's a poor crutch for lazy management which doesn't prioritize the actual work necessary to manage people effectively (real time coaching and correction, fact based performance feedback, setting objectively measurable goals, regularly scheduled one-to-ones, etc.), including promptly and effectively dealing with poor performers. The actual skill and discipline of managing people effectively has gotten short shrift as of late.

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