Are There Any Benefits to Force Ranking Employees?

`I’ve been heads down working and have to admit that means I am not keeping up with reading some of my favorite blogs.  I do a little each day but missed this one from Rachelle Falls over at Corporate HR Girl from about a month ago.

I encourage you to read her take on Microsoft ending their stack ranking, or in old Jack Welch terms, rank-and-yank.  Overall, it sounds like Rachelle clearly falls into the camp that this is not the way to motivate your employees and that there are few benefits in adopting the practice.  It hit me personally though because I was raised for over half my career in this type of work environment and believe it can work in certain situations.

What is the vitality curve?

To get you up to speed, what we’re talking about here is using the vitality curve to evaluate performance.  This means, in most basic terms, that the organization uses a type of forced ranking (or forced distribution) to evaluate where each individual falls compared to the rest of the organization.  In the case of GE, Welch adopted the 20-70-10 model in which 20% of your employees were the top performers, 70% were still very vital to the organization getting work done, and 10% were just not cutting it.

I’ll say that in my opinion, this is not the best way to evaluate performance in all organizations.  However, in consulting organizations for example, this can be a very effective method.  Growing up in Big 4 public accounting, we used this method.  Left to their own devices, many managers or partners would have let low performers or marginal performers hang on years longer and ultimately, hurt our revenue and profitability.  By being asked to identify the low performers in an open forum with other managers, it called out the low performance and those employees had a very short amount of time to improve whatever behavior caused the poor performance or he/she was exited from the firm.

In that situation, it worked fairly well because we were hiring type A, driven employees for the most part.  We also had continuous hiring so that there was always another group of new hires coming in that were chomping at the bit to prove themselves.  You can see that this competitive environment could adapt to the vitality curve fairly easily.  In other industries I’ve worked in, like healthcare, I can’t see this as an effective way to manage performance.  Really, if your organizational culture is one striving for collaboration, this model can certainly hamper your efforts.

Benefits of using a Vitality Curve

There were some benefits to managing HR in an environment like this.

1. I was always able to have frank, open discussions with employees about their ranking and specifically what the employee needed to do to fill any skill gaps.
2. It allowed HR leaders to be completely transparent about compensation.  I could tell someone where he/she stood in relation to peers and how that equated to their place in our compensation strategy.
3. It forced managers who tended to be soft or who would beat around the bush to actually tell lower performers when they were not meeting expectations and specifically why they were not meeting them.

My point is this….like anything, you can’t throw the baby out with the bath water.  Organizations that are highly competitive or want to drive certain behaviors are still using or adopting the curve to evaluate performance.  Not too long ago, Yahoo announced that they are adopting the practice.  Most people are saying that is just another nail in the coffin of Marissa Meyer as she kills morale at Yahoo.  Time will tell.

I will share that as an employee who was raised being evaluated by this model, when you go to work somewhere else it can be frustrating to see low performers left “hanging on” in the organization for years without consequence.    Also, regardless if you use this practice on a regular basis, wait until you have to go through a RIF and your leaders will quickly be ranking their staff to determine who to cut.

Just the other side of the coin.

What do you think?  Too harsh, acceptable, effective?  Have you ever worked in an environment that used the vitality model?  Share in the comments.