Forced ranking was once considered a promising assessment type. Although it’s no longer commonly practiced, it’s useful to know what it involves, as well as its benefits and problems.

A History of Forced Ranking

Forced ranking rates employees along a curve. Select workers are named top performers, and others are considered bottom contributors. Those at the top receive significant rewards for their performance, while the lowest are fired. There are usually five assessment levels; individuals under top performers would receive modest rewards, and those just above the lowest would be given extra training.

This method promised a stronger corporate culture. It correlated with total returns to shareholders and strengthened the business climate by eliminating weak and rewarding strong performances. It also claimed to make the performance review a key management responsibility again. When implemented, forced ranking did help managers identify poor performers; often for the first time. Managers may have previously smoothed over the problems these employees had or worked to justify them. With forced ranking, they couldn’t make accommodations any longer.

Problems on the Horizon

It didn’t take long for problems to start showing up. The elimination of the initial bottom ranking eventually led to good performers being rated as needing improvement and, eventually, to their termination. The system also promoted dishonesty, as managers want to protect their employees or teams.

This system also led to negative corporate cultures. In many of the businesses that attempted forced ranking, employees soon became unable to function in a group environment because their coworkers were now rivals. Although this problem can be solved by not informing employees that a forced ranking system is being used, it still sends a bad message.

While this process may pinpoint poor performers, it only works for a short time – and the issues causing the behavior may never be addressed. After all, an employee may just be adjusting to a new atmosphere or learning how a business functions.

A Better Alternative for Quality Reviews

Consistency and fairness are better achieved using other options. For example, with methods like the 360 degree appraisal, anyone who has worked with an employee can contribute. More traditional approaches are also better fits for many corporate cultures. Whatever you decide is right for your business, every system requires management training for the best results.

Forced rankings, although sometimes flawed, can be a useful tool to improve the management process when done correctly. Essentially, it forces managers to address an employee’s weaknesses, which may be difficult for them to do. Many managers have a tendency to minimize problems, which only leads to more in the long term. With proper management training, this system teaches a manager how to analyze employees from an unbiased perspective. Forced rankings are beneficial when the management system needs to be refined or formalized.

Analyzing trends and changes is an important part of business. You should be assessing and working to improve every element of your enterprise. If you’re hoping to enhance the performance review process, consider your options carefully. If you choose to use a forced ranking system, management training and tact are the keys to a successful outcome. Consider signing up for our performance review creation tool for the best results.