Forced Ranking: Good, Bad, or Both?

Page 1 of 6 From Research Conducted by Corporate University Xchange in August, 2007 Forced ranking is a controversial management strategy being investigated by many companies, and it is often difficult for managers and leaders to determine whether or not their organization should implement such a system.   Corporate University Xchange (CorpU) President and CEO Sue Todd, and Performance Management Research Practice Leader Raj Ramachandran recently presented a live webinar to 360 attendees where they discussed whether forced ranking is a great idea, or if it really is just an outdated management strategy.  In addition, Ramachandran followed up the debate with more in depth research, including telephone interviews with approximately ten organizations – five that use forced ranking, and five that do not.   WHAT IS FORCED RANKING? Forced ranking can be defined as any system or procedure in which individuals or groups are ranked against one another in a specific scheme.  It is often referred to as forced ranking distribution systems (FRDS) and/or topgrading.  This approach is often used in organizations where there is a constant drive to create a high performance culture, with human capital being used as a critical lever to drive that performance.  The challenge in these situations is in learning how to build differentiation into the organization, specifically to identify and reward top talent. Many corporations are looking into perfecting their existing performance management system by implementing a forced ranking practice.  Like most new concepts, this procedure does not come without the ever-present naysayer.  Advocates of forced ranking will tell you it raises the talent quality bar and motivates employees to strive towards their highest potential.  The opponents will be the first to note that forced ranking jeopardizes employee moral, and could potentially create a bout of legal issues.  When asked whether or not forced ranking was implanted into their organizational culture, the webinar attendees replied as follows: 43% currently use forced ranking 16% are implementing forced ranking in the near future 23% have no immediate plans to implement forced ranking, but it has been discussed 16% have no intention of implementing forced ranking One common business driver for performance management systems is linked to the external market or industry pressures.  With the ever-growing competition for talent, organizations are constantly forced to gain and retain new talent – and fast!  Ramanchandran stated that forced ranking is the answer because it would improve employee performance.  Todd had other thoughts about this phenomenon, relating to a 1980’s Oldsmobile ad campaign.  << Start < Prev 1 2 3 4 5 6 Next > End >>