Customer Reviews

Forced Ranking: Making Performance Management Work

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Although certainly not an imperative, I do recommend reading one or both of Grote's earlier works first (Discipline Without Punishment and The Employee Appraisal Question and Answer Book) before reading this, his latest work. In all three, he generously shares what he has learned over several decades as a senior-level executive in HR at Frito-Lay and United Airlines, then as founder/CEO of his own thriving management consulting firm (which he later sold to his senior partners), and since then as an independent consultant. In fairness to Grote, the term "HR" has much wider and deeper meaning than it does to many others. He cares passionately, almost obsessively about helping to achieve the full development of every human being whom he encounters, both within the organizations which retain his services and among those who read his books as well as those who comprise the numerous audiences to which he speaks.

In this volume, Grote examines a concept -- forced ranking -- which began to receive increasingly greater attention when advocated by Jack Welch during his tenure as CEO of General Electric. It is important to note that Grote is by nature and training an empiricist in that he rigorously observes real-world experience (his and others') rather than relying almost entirely on theories, hypotheses, assumptions, etc. He is also a pragmatist in that he is determined to learn what does and doesn't work...also, WHY. Back to Welch. In essence, GE's version of forced ranking has a 20/70/10 performance measurement ranking scheme: 20% are the best, 70% are vital, and 10% are at the bottom. (Reportedly, those in the last group are strongly encouraged to seek new career opportunities elsewhere but, if necessary, terminated. ) Grote notes that this ranking scheme has some obvious advantages and has been adopted (usually with some modification) by other major corporations.

Grote recommends an alternative ranking scheme which he explains in sufficient detail. It remains for each reader to determine (a) whether or not forced ranking is appropriate to her or his own organization and, if so (b) which ranking scheme would be most appropriate. Grote can assist with making both determinations.

In my view, the more immediate issues to address include these:

1. With rare exceptions, organizations reward what they value most. That said, in terms of human resources, what are a given organization's greatest human resource needs? What incentives are used in response to those needs?

2. To what extent does that organization recruit, interview, hire, and then develop people to fill those needs?

3. Are performances expectations clearly understood by everyone directly involved (i.e. supervisor and direct report)?

4. Are performance metrics also clearly understood by everyone involved?

5. Are they applied fairly and consistently?

6. Finally, as HR needs change, are performance expectations and metrics modified in a timely response to those needs?

As Grote duly acknowledges, forced ranking is certainly not for everyone. Moreover, what worked at GE during the Welch years may not have been appropriate for most other organizations then, nor appropriate for GE now. (Presumably, over the years, GE's senior management has made the necessary modifications to which I referred earlier.) My point is, the six questions just posed must be answered first before making a decision about whether or not to implement some version of forced ranking enterprise-wide.

As is his SOP, Grote presents his narrative in combination with a number of reader-friendly devices which include sequences of key points highlighted in bold face, check-lists to facilitate self-audits as well as evaluations of the reader's own organization (e.g."First Things First - Is Your Company Ready?"), and three especially helpful appendices: Memos and Scripts for Managers, FAQs About the Forced Ranking System, and Forced Ranking and the Law. Grote concludes his book as follows: "Conventional performance appraisal has an important place in the talent management palette of any organization. So does forced ranking. Neither process by itself is complete; both have limitations. But together they can provide an accurate and well-rounded picture of the strengths and weaknesses of each member of the team." Senior-level executives in most organizations continue to insist that "people are our most valuable asset." Grote challenges them to determine precisely what that total value is...and to do so with metrics which are realistic, consistent, and (yes) equitable for everyone involved.

Those who share my high regard for this volume are urged to check out Grote's earlier works as well as Leigh Branham's The 7 Hidden Reasons Employees Leave, James O'Toole and Edward E. Lawler III's The New American Workplace, and Workforce Crisis co-authored by Ken Dychtwald, Tamara J. Erickson, and Robert Morison.

A forced ranking system where each employee is ranked relative to his peers has a great deal of potential when it is administered fairly, humanely, and evenly across departments. When such a system allows lower level (or really any level) managers to pick favorites, to discriminate unfairly or is applied unevenly from department to department; the system falls apart, and can even lead to the courts.

The key, of course, is to create a forced ranking system that is not only fair but which is also viewed by the employees as being fair. And, should worse come to worse, it must also have legal defensibility.

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.

Mr. Grote has written this book to share stories of companies with successful programs. He discusses what makes a program successful and the places where it can fail.

Do not skip Appendix C where he talks about the legal aspects where again he reports on what happened at several companies and the court cases that resulted. In fact, you just may want to read Appendix C first and keep it in mind as you read the rest of the book.

I have read a number of books and papers on the subject of forced rankings. Forced Ranking by Dick Grote really is the best of the lot. He takes a very complex and misunderstood topic and puts it in a very readable and understandable form. I think every Human Resource professional and CEO should take the time to read this book. It will quickly bring you up to speed on the cutting edge thinking on this subject, and, if used properly, can be a powerful tool in torquing up your workforce. Forced Rankings is worth the time and effort to read. I recommend it highly.

If you want to start an emotional and heated discussion at work, just mention the term "forced ranking" when it comes to employee reviews. There'll be no lack of opinions. Having lived through the "rank and yank" system of Enron, I thought it would be good to get a positive view of the process from an expert. The book Forced Ranking: Making Performance Management Work by Dick Grote does an excellent job presenting the way the system is supposed to work.

Contents: The Differentiation of Talent; Risks and Rewards; Getting Started; Getting the Mechanics Right; Forced Ranking - Behind The Scenes; Forced Distribution; Getting the Truth into Performance Management; Memos and Scripts for Managers; FAQs About the Forced Ranking System; Forced Ranking and the Law; Notes; Further Reading; Index; About The Author

Forced Ranking is the process whereby the employees in a certain grouping or level are compared against their peers to determine the relative worst/best of the group. This may take the form of "top 10/bottom 10 percent", "20/70/10 percent", "quartiling", or a number of other ranking systems. The net effect is to focus your development efforts on those that show the most promise for the future, and to transfer/replace those who aren't measuring up to the rest of the group. These types of forced ranking systems eliminates the tendency for supervisors to rate everyone above average, thereby rewarding mediocrity and demoralizing the top players. This is also different than forced distribution, where performance reviews have to fall into some distribution curve in order to dole out merit raises and bonuses. Grote does an excellent job in explaining and documenting how the process works, how it benefits companies, and showing examples of where it's worked to perfection. He's also not ignorant of the fact that it can fail if not done properly, and he addresses those issues in a clear and concise manner.

My personal view is that I like these types of systems. I feel the strongest performers *should* be rewarded and given opportunities to continue their growth. Conversely, watching people coast and get above average reviews doesn't sit well with me. Enron's "rank and yank" system was one where I fared well, but it was a failure due to back room deal making and political decisions. Fortunately for me and my team, we had a boss who was really good at promoting his group. I'm currently at a company that recently started this type of calibration process. Again, while it makes a number of people nervous ("Am I going to get fired?"), I think this is one of the best ways to show people exactly where they stand, as well as allow them to determine how hard they want to work within the organization to achieve the rank they want.

Excellent book, and one that both managers and workers involved in forced ranking systems should read. It beats getting just the "gloom and doom" bias commonly associated with the system, and it helps you figure out how to maximize your own value to the organization.

In his previous book, Discipline Without Punishment, the author's main premise was that employee punishment should be avoided at all cost because it "produces side effects and long-term consequences - anger, apathy, resentment, frustration - that end up being far more costly than whatever the original misbehavior might have been". However, in his new book entitled, Forced Ranking, the author turns right around and then tells the reader that a Forced Ranking System is really not a form of the same type of employee punishment and does not create the same long-term consequences. This is illogical and many real world examples and facts work to contradict the author's message. Wherever a forced ranking system has been inculcated, the majority of people come to resent it. Good employees resent being forced into the bottom 10% category yielding them no pay raise and putting them on an embarrassing probationary period even when they have been meeting the company's performance standards and good managers resent being forced to "reward" good employees this way. Turnover of good employees costs companies millions of dollars every year as well. The cost of hiring new employees is a minimum of 2x the salary of the position, good employees that are let go merely transition to the competition and high turnover never allows the company to establish an experienced world class workforce which takes on average 15 years to develop. From every angle this is a bad system to indoctrinate into any organization but then again any merit system that begins with the word "Forced" ought to raise a few red flags.

Forced ranking is a loaded topic. Any system that suggests that a company should fire the bottom 10% of its workforce will raise eyebrows. But author Dick Grote, a performance management expert, makes a thorough case for the harsh rigors of forced ranking. By tapping his personal experiences and utilizing input from industry leaders, Grote assembles a thoughtful and convincing presentation. At the same time, he addresses problems and obstacles inherent in forced ranking. We recommend this book as must reading for the leaders of any company that is considering a forced ranking system. It will also prove valuable to human resource professionals and those who just want to know what all the hubbub is about. Indeed, you might say this book scores in the top 10%, so the author can breathe a sigh of relief - for now.

The book is lucid and is easy and pleasant reading.
It fully covers the topic.
It is concise without pointless verbiage so it is worth reading from cover to cover.

If we were to rank all living Nobel Laureates, ten percent of them would be "Bottom 10." What would we do to punish those losers?

Forced Ranking, which was forced reading from my Company's VP, was perhaps the poorest example of published material I have had the displeasure to read. My Calculus textbooks had more substance. How Dick Grote could take 10 pages of material and repeat himself enough to make it last over 100 pages is the only amazing thing about this book.