Forced Ranking Forces Fear
Robert Cenek
3 Comments
“Forced ranking has been around for a lot of years. Only in recent times has there been a reaction against it. Enron, for instance had a forced ranking system and still the company imploded. Other companies that have used forced ranking have continued to use them, and often used them to get their employees to perform better and to make the changes in their work habits that make them better employees.”
These comments were written by an Amazon Top 10 reviewer in extolling Dick Grote’s new book, “Forced Ranking: Making Performance Management Work.” What’s striking about the reviewer’s comments is that he or she apparently sees no connection between forced ranking.................. and Enron’s implosion! Was any of the chicanery that occurred at Enron directly attributable to a work culture that endorsed pugilistic contests and organizational Darwinism at all costs?
A significant number of organizations, industrial leaders, consultants and business pundits have embraced the philosophy and use of forced ranking. Jack Welch, retired CEO of General Electric (GE), is considered by some to be the “godfather” of forced ranking, and GE’s pervasive endorsement and use of the method certainly went far in legitimizing and popularizing the concept. According to Welch, "A company that bets its future on its people must remove the lower 10 percent, and keep removing it every year—always raising the bar of performance and increasing the quality of its leadership.” Ford Motor Company also used the procedure until the troubled Motown automaker came under fire for the method’s disparate impact on older workers. Bradford Smart may have rejuvenated the concept with his 1999 book, Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People. Dr. Smart advocated the practice of packing the organization with A players, and weeding out the C players. Yes, even those with a passing grade are retro-recruited.
Two visionary management gurus, Ed Lawler and Jeffrey Pfeiffer, have consistently excoriated this practice, calling it misguided, destructive, and outright antithetical to sound leadership. Lawler aptly pointed out the statistical disconnect – i.e., smaller organizations and departments can not have a normal distribution of talent unless employees are randomly selected. While the typical selection system used in many organizations is pretty suspect, it’s certainly more valid than flipping the coin!
Research by Scullen, Bergey, and Aiman-Smith (2005) has brought some clearer thinking to the continuing discussion over this GE-inspired management fad. They found that forced ranking systems noticeably improved workforce performance in the first few years, but then quickly tailed off and eventually produced no further returns to organizational efficiency. The researchers questioned the usefulness of the technique given these results and the possible negative side effects from the use of forced ranking.
America ’s work settings have enough systemic stressors – global competition, high health costs, fear of layoffs, workplace violence and the push for quarterly results. Adding another stressor, the fear of forced ranking, seems counterproductive to building a higher level of teamwork in the settings where it’s employed. It may be better to heed Deming’s call to drive fear out – and not into the workplace.
View Printer Friendly Version
Email Article to Friend
Reader Comments (3)
Good management consists of employing more systematic methods. There are no silver bullets, no pat answers. There ARE structured approaches that managers can use that are not overly difficult to employ.
My personal belief is that the much celebrated and so-called successes of the concept can be called into question (with the possible exception of GE to date), and more importantly, that the concept is statistically and mathematically bankrupt. It presumes a normal distribution exists in organizational units, which can only be the case if people are selected randomly.
I agree that forced ranking was not solely responsible for GE's success in the past, nor was it responsible for the shameful debacle at Enron. At Enron, the practice was indicative of an organizational culture that valued unhealthy competition and winning at all costs - hence the eventual journey into the abyss of "cooking the books." To date it appears that GE has a culture and management practices that apparently are keeping the dysfunctional aspects of forced ranking in check. I do find it rather perplexing however, that the practice would be needed there given the massive layoffs that occurred at the firm throughout the 80's, plus the firms fine reputation for developing aggressive, results-oriented transformational change leaders who I would expect to be very adept at giving feedback and dealing with performance problems.
Last, let's not forget that Enron was named as the 18th most admired corporation in 2001!