Microsoft has been taking a lot of heat over its employee review process known as “forced ranking” or “stack ranking.”But Microsoft is far from the only tech company doing it.
We’ve heard from employees at Dell, Accenture and Deloitte who tell us they’ve experienced the same sort of thing.
Actually, GE’s CEO Jack Welch is credited with making it popular in the 1980’s. He called it Rank and Yank, reports Forbes, meaning the bottom 10% would get canned.
Forced ranking is when all employees are grouped into buckets, typically top 10 or 20 per cent, middle 80 or 70 per cent and bottom 10 per cent. The idea is to find out who are the top performers and who needs to be helped or let go.
There’s a quote floating around the Internet that some 60% of Fortune 500 companies are doing forced rankings. We tracked down the source of the quote and asked him about the practice. It came from human resources expert Dick Grote, president of Grote Consulting and the research he did for his book Forced Ranking: Making Performance Management Work [2005, Harvard Business Review Press].
Surprise! Grote thinks forced ranking is “a wonderful idea,” he told BI.
“Forced ranking done well—and that’s the caveat—is a very good thing for any organisation of 10 people or more,” Grote said.
That’s because forced ranking makes it impossible for managers to declare that all of their employees are above average, he says, and that makes it easier to find and retain the top guns.
But that doesn’t mean that most companies are using it well. The biggest mistake is to use it forever.
“If you’re going to do forced ranking, look at it as a short-term, three-five year thing. Do it annually but don’t do it forever. By the end of four or five years, you’ve gotten all the value,” he says.
Microsoft’s particular implementation of stack ranking has been used—and under fire—for way more than five years. In 2005, HR grad student Stephen Gall published a scathing paper on it for Walden University.
That same year Microsoft appointed longtime exec Lisa Brummel as its new HR chief. She promised to fix Microsoft’s review process. Years have passed, and employees are still complaining about it.
But Grote insists that when forced ranking is done right, most employees won’t complain. They will be happy not to have to work with underperformers.