Rank and Yank: Legitimate Performance
Improvement Tool or Ruthless and Unethical
Management?
Forced ranking is a performance appraisal system popularized by Jack Welch when he was CEO of General Electric. It is a system that has been given the derogatory label of “rank and yank” by its critics. The intent of the forced-ranking system is to improve the performance level of an operation by getting rid of the bottom 10 percent of performers and hiring replacements who will perform at a high level. a Ranking judgments can be made in a variety of ways. b For example, a forced distribution can pre-assign a set percentage of employees that must be placed into categories such as “most effective,” “average,” and “needs improvement.” Alternatively, a simple ranking of workers from best to worst can be used. Top performers may be rewarded and offered promotion or training. Low performers may be given a warning or terminated. Forced ranking has been employed by a number of companies, but some legal challenges have been made. For example,
Microsoft successfully defended several discrimination suits challenging its use of a forced-ranking system. Conoco used a forced-ranking system and reached an out-of-court settlement in a discrimination lawsuit. Ford Motor Company implemented a forced-ranking system in January 2000 and ended up paying an award of $10.5 million as a result of class action suits charging that the system had a disparate impact on some subgroups of employees. Ford has since shelved its forced-ranking system. c
Overall, however, there have been relatively few legal challenges to the forced-ranking system. It remains a controversial management practice. A potential downside of forced ranking is increased competitiveness among workers. d Under a forced-ranking system, workers can become less focused on common or collaborative tasks. Instead, workers might focus on their individual performance and of performance, but the effect decreased to a near-zero level within six years.
Address the following issues: a. Why does the system work? That is, why did the simulation find improved performance? b. The logic behind the forced-ranking approach and the simulation is that performance in a workplace is normally distributed. Do you think this is an accurate assumption? Why or why not? c. If performance in a workplace is not normally distributed, do you think a forced-ranking approach would still improve the average level of performance in the organization?
Explain. Share your judgments on these issues with the rest of the class
Critical Thinking Questions
1. Do you think forced ranking is a good performance management system?
Why or why not?
2. Part of the forced-ranking label reflects the intent to force distinctions among worker performance levels. In an absolute- rating system, everyone could be rated “above average.” Does this difference between the absolute- and relative-rating approaches mean that the absolute performance judgments are wrong? Explain.
3. As a manager, would you prefer to rely on an absolute performance rating system or a relative system, such as forced ranking? Why?
4. Can you devise an absolute-rating system that would guarantee differentiation among workers? Why or why not?
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