Book Review - Forced Ranking by Dick Grote
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.