forced ranking

take a stance for or against forced ranking. Support your response with examples of two pros and two cons that you must consider in your stance.

  • Specify two legal considerations to which an organization may be susceptible if it were to implement forced ranking performance evaluation systems unfairly and inaccurately. Suggest the key corrective actions that an organization could take in order to rectify issues that arise from said unfair and inaccurate implementation.

chapter notes below:

Welcome to Performance Management. In this lesson, we will be discussing   forced rankings: Pros, cons, and practices.

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Upon completion of this lesson, you will be able to:

Evaluate the concept of a forced ranking   performance evaluation system.

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Supporting   Topics

Specifically, we will discuss the   following topics:

Pros and cons of a forced rating system;

Legal considerations of a forced rating   system; and,

Implementing a forced rating system

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It appears   forced ranking usage is infrequent among organizations, according to a 2005   survey conducted by the Society for Human Resource Management. Of the 330 respondents, only 43 indicated   their organization used a force ranking system, and only two indicated that   their organization’s forced ranking approach resulted in terminations.

So, what are we   talking about when we say forced ranking systems? A forced ranking system, also known as a   relative rating, specifies a percentage of employees being evaluated must   receive the highest and lowest ratings. Jack Welch, the former CEO to General   Electric, is well known for his forced ranking system known as the Vitality   Model. His model specified that all managers are to rank their employees   based on a twenty-seventy-ten percentage scale, whereas the bottom ten   percent are classified as nonperformers and are typically terminated from   their position.

The absolute   ranking system is based on the same principle, but has a different   flavor. Absolute systems involve   making judgments about people in relation to descriptions of job-related   behaviors or traits, or both. Under these systems, all individual are   independently assessed against the same standards, instead of against one   another. Examples of absolute systems   include behaviorally anchored rating scales and weighted checklists.

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Fairness and   Accuracy

Are forced   rating systems fair? This is a   question of value. Let’s look at the   pros and cons of forced ranking systems. After our discussion, you can decide if they appear fair to you.

Advocates for   forced ranking systems argue that the process combats the problem of   artificially inflated ratings. Before Ford Motor Company piloted a forced   ranking system, 98 percent of all managers in the company were evaluated at   the top of the scale. By forcing a   distribution, it is more likely to ensure a fairer distribution of pay for   merit raises.

Advocates also   feel this approach is fairer to poor performers because it gives a definite   ranking of where an employee stands, which gives the employee the opportunity   to make changes.

On the other   hand, opponents claim that the forced system alienates top performers. If a manager is forced to give a top   performance ranking to only two employees in her department, yet she feels there   are five top performers in her department, the forced ranking system   alienates three top performers who were forced to be ranked as mediocre. This   is tied to the belief that any predetermined performance distribution can   never be fair.

Additionally, opponents   find that statistically forced rankings are impossible to conduct fairly if a   firm ranks less than 100 people. Most   companies using the forced ranking system use the methods on thousands of   their employees.

All evaluations   are typically based on a subjective criteria and it is in the case for forced   ratings. Critics say that too often   rankings are based on subjective judgments tied to standards that are   interpreted inconsistently.

Lastly,   opponents feel that forced systems can still lead to favoritism, or even   manipulation and organizational politics. For example, a manager knowing that he has to rank someone in his   department as unfavorable may keep a poor performer on the payroll in order   to identify the bottom percentage of the ranking system more   efficiently.

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Performance   Improvement

Our next   question is whether or not a forced ranking system improves individual or   group performance. Proponents believe   it distinguishes between talent levels better than any performance appraisal   system. The organization then more   effectively allocates resources for this higher talent pool.

Other business   outcomes stemming from having a forced ranking system include clarity on   organizational values that helps focus employee efforts and reinforcement of   a merit-based culture, which more likely will attract individuals who value   achievement and performance.

On the other   side of the coin, opponents point out that a policy of replacing the bottom   10 percent every year is not sustainable. At some point an organization is going to start terminating capable   employees.

Ed Lawler,   author of “The folly of forced ranking,” criticizes the forced ranking system   by saying, “it hardly makes sense for managers to invest in developing   individuals who are marginal performers when they believe that in a very   short time they will have to eliminate the employees whom they develop.”

Lastly, another   critic sees that a forced ranking system undermines collaboration and other   contextual behaviors because the nature of forced rankings creates a   “dog-eat-dog” environment.

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Employee Morale

Does a force   ranking system lift or damper employee morale? Critics of forced rankings state that low   ranking employees may actually be meeting their goals and objectives, and   thus being rated poorly produces negative morale among capable   employees. Additionally, putting   people into brackets, such as low, middle, and high performance categories,   can become a self-fulfilling prophecy for an individual to carry out the label   given to her. Forced rankings can also   create a culture in which managers are not held responsible for developing   employees.

Advocates for   forced ranking system point out that other appraisal tools can lead to the   same negative effects on employee morale. Additionally, evidence in a few studies points to overall employee   satisfaction is on the decline. One   study cited the inability to remove poor performers quickly as being a   determent to employee morale. The   forced ranking system efficiently identifies these low performers and forces   action to be made, regardless of whether the action is termination.

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Legal   Considerations

Is forced   ranking legal? Yes, to one extent,   forced ranking systems do hold up in a court of law. However, the legality issues involving   forced rankings stem from an individual or group of individuals feeling that   the forced ranking system discriminated against them. For example, a disproportionate number of   older workers receive lower rankings. This has been the grounds for legal   action based on the Age Discrimination in Employment Act.

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Many of the   controversies surrounding forced ranking systems stem from the way in which   the system was implemented in the workplace.

There are two   areas to consider when implementing a forced ranking system. The first is the system’s design. Determining whether the ranking is an   independent measure of performance or a complementary measure is important in   setting up the rest of the system. Organizations will also want to determine the consequences associated   with the ranking results, such as performance improvement plans, termination,   or promotions. Also, the organization   must ensure that the ranking criteria are job related and must decide how to   communicate the design to employees.

The next step is   to implement the design. It is   imperative that all managers be trained on how to interpret the rating   criteria, on how to make accurate behavioral observations, and on the   mechanics of participating in ranking discussions. These ranking sessions must be well   coordinated and designed so that the discussions themselves are structured   around the criteria and not subjective topics. Also, providing guidelines for managers on   how to have the conversation with employees about their ranking is a useful   tool.

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Check Your   Understanding




We have now reached the end of this   lesson. Let’s take a look at what we   covered.

We   started by defining relative or forced ranking systems. They “specify that a percentage of   employees being evaluated must receive the highest and lowest ratings.” Absolute   rating systems “involve making judgments about people in relation to   descriptions of job-related behaviors or traits, or both.”

We   looked at what forced ranking’s advocates and opponents say about fairness   and accuracy, performance improvement, and employee morale. Each discussion highlighted these items in   order for you to make an informed opinion whether or not you feel forced   ranking systems are an appropriate organizational tool.

We   then discussed that forced ranking systems are indeed legal, but that   lawsuits about age discrimination have surfaced as a result of the design or   implementation or both of forced ranking systems.

Lastly,   we gave suggestions on how to implement a forced ranking system.

In   the area of designing the system, the recommendations include:

First,   decide how you are going to use ranking;
Second, determine the consequences you want associated with the results;
Third, ensure ranking criteria is job related; and,
Fourth, decide how to best communicate the design to employees.

Then,   when implementing the design make sure to:

Train   raters to use the system;

Coordinate   and design the ranking sessions among several individuals; and,
Lastly, provide guidelines for managers to have conversations with employees   about the ranking results

This completes this lesson.

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