There can certainly be concerns about the forced ranking process I advocate. Turns out, most of those concerns are actually benefits.

First objection—it’s arbitrary. Well certainly using a predetermined distribution (like top 20 percent, vital 70 percent, and bottom 10 percent) is arbitrary—and that’s its great value. Using fixed and arbitrary percentages forces managers to make tough decisions about who’s an A player, who’s not, and why not. Otherwise, as happens in too many performance appraisal systems, everyone gets rated superior, managers never have to have tough conversations about performance, and the organization slowly slouches toward mediocrity. Restricting the number that can fall into the A category, and demanding that managers identify a bottom 10 percent who, relative to their peers, are weaker performers, ensures that top talent is recognized and that those bringing up the rear have no false sense of security.

Of course, if you ranked a hundred people using a 20-70-10 process, #21 would be much closer in performance to #20 than she is to #90. That’s why companies that use the forced-ranking process tailor the actions they take with individuals to the individuals themselves, not just to which ranking bucket the person ended up. When I write scripts for managers to use in letting people know how they came out in their company’s A, B, and C player analysis, I develop five scripts, not just three: for the solid A player, the B+ (the #21 guy and his counterparts), the genuine B, the B- (the ones who barely avoided falling into the C category), and finally the true C level performer.

But it is important to use buckets in making relative comparisons (e.g., top 20, vital 70, bottom 10; or quartiling, or some similar scheme). Never ask managers to precisely rank their people in exact performance order. It’s impossible to distinguish between #20 and #21, and the totem-pole approach (who’s #1, who’s #2, and so on down until the last and worst performer is fingered) generates highly valid concerns about accuracy.

Yes, forced ranking is an imperfect process, as is any process in which fallible human beings must make tough decisions in an arena where solid, unarguable, quantitative data don’t exist. The forced-ranking process requires the exercise of honed, objective managerial judgment in a situation where information is always incomplete and the facts are sometimes contradictory. But managers make decisions based on limited data all the time—which projects to fund, which to shelve; when to react swiftly to a competitor’s move, when to let time take its course. Just because a decision isn’t based on countable units doesn’t mean it isn’t objective. Employee ranking is not the same as solving an algebra problem—it can’t be reduced to a mathematical formula.



About the Author
Dick Grote is a management consultant in Dallas, Texas and the author of several books. His most recent book, How to Be Good at Performance Appraisals, was published by the Harvard Business Review Press in July 2011.