Critics say forced ranking leads to employees becoming fearful and anxious, which can dampen their initiative and creativity. They also say it promotes backstabbing and competition over collaboration.
There are other criticisms as well. Ranking employees risks discriminatory biases to play a part in evaluation. Comparing people to each other is in many industries a subjective exercise, prone to corruption or perceptions of corruptions. For example, in 2001, Microsoft was hit with a class action that alleged the company’s white managers favoured their white friends over the software company’s black employees. The suit was eventually dismissed in Microsoft’s case, but it doesn’t rule out such factors being a possibility in other companies.
And, of course, there are practical constraints in using forced ranking, which can be time-consuming and expensive.
Forced ranking is most useful in large companies, where there are likely to be some staff who are underperforming, and the resources to improve mediocre performers.
However, that sheer size can make forced ranking a nightmare to implement. Grote, who has been called in to help more than 60 Fortune500 companies implement forced rankings, describes the process (at a large American consumer goods company) as taking eight-hour meetings of the company’s managers and executives every day for a week to try and sort everyone into their segment.
And that’s just the time taken to sort everyone – there is still the sackings and the career development to work through. Not to mention the cost of giving the top performers a bonus.
This article first appeared on LeadingCompany.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
