Forced ranking is a performance management technique that categorizes workers in preset performance groups. This performance technique is used to rank hard working employees while yanking those whose output may be defined as poor. In 1980s, Jack Welch insisted on using this approach at General Electric (GE), which proved to be quite effective in increasing the company’s business revenue to a great extent. GE was one of the first organizations to apply this output method.
Nowadays, many companies around the world utilize this technique. The benefits of this technique incorporate rewarding best performers, pinpointing workers with developmental requirements, and firing everyone whose productivity is below the standard. Performance specialists state that there are other various assessment techniques that are capable of detecting performance efficiently, at the same time reducing the use of forced ranking.
Forced ranking is considered to be popular among huge corporations that have hundreds or even thousands of workers and require their HR processes to systematized. If one of such corporations is facing difficulties and seeking solutions, forced ranking could be applied to take care of their issues. The long-term effect should embrace increased productivity, lucrativeness, and shareholder value. Nevertheless, there are times when a company’s culture may change due to the impact of forced ranking, introducing a more competitive ambience and diminishing the team spirit.
Companies such as Microsoft admire this technique because they say that it is performance driven. This appears to be very important for the knowledge- and buyer-centered industries. This type of system ensures that the technique rewards success and fines failure. Microsoft executives state that 15 percent of the organization’s workers have to be fired every year (Bryars & Rue, 2011).
Forced ranking is used for categorizing governance and high-level talent numerically; it provides best results when used for short-term periods, particularly for a three-year period. This allows to get rid of underperformers and contributes to return revenue. Ultimately, the company will understand that it has no workers that could be referred to underachievers.
Unfortunately, this technique has flaws, since it promotes dysfunctional company demeanor. For example, when workers have to compete with each other, it generates negativity and competitive working conditions. Thus, many workers will hesitate to help their colleagues deal with and overcome work-related problems.
A forced ranking system can reveal information that ordinary performance assessment techniques cannot. On top of that, forced ranking could lead to conspicuous enhancement in workforce potential. Most of this enhancement should be anticipated to happen within the first couple of years. This improvement is, to a great extent, a function of the number of workers that need to be fired and the rate of voluntary turnover. A forced ranking technique can improve workforce potential because it helps to identify lower-potential workers and replace them by those workers who have more potential (HBS Working Knowledge, 2005).
Many opponents of obligatory ranking have admitted that forced ranking may actually raise the total productivity of an organization’s employees, although it may create unfavorable consequences that would negatively impact the corporate spirit of workers, effective teamwork, and collaboration. It is also important to note that there is a chance that a forced ranking system would improve the general quality of a company’s applicant pools.
References
Bryars, L. L, & Rue, L. (2011). Human resource management. Boston, MA: McGraw Hill.
HBS Working Knowledge. (2005, November). Forced ranking: Making performance management work. Retrieved from http://hbswk.hbs.edu/archive/5091.html
