Forced Rankings Lead to Unforced Errors

Conversations about forced rankings and the use of the bell curve in performance reviews are bubbling up again. During the last month — in Singapore, Kuala Lumpur, and Manila — we heard people debating the pros and cons of this approach.

Let’s be clear: the only “pro” is that lazy managers can use it to make the performance review process easier on themselves. The cons, however, are many. Forced rankings gives you a false impression of your actual workplace performance, and it disrupts employee engagement, collaboration, and development.

Here’s the biggest problem with the bell curve: THE CONCEPT WAS NOT DESIGNED WITH YOUR WORKPLACE IN MIND!

The bell curve is based on the idea that in a random sample, 20% of those in the sample will be at one end, 60% will be in the middle (the dome of the bell), and 20% will lie at the other end. That’s in a RANDOM SAMPLE…but your workforce is NOT random. You have come up with criteria, reviewed CVs to find people who meet those criteria, interviewed the most promising candidates to see who fits well in the organization, and selected the one that you think will be great. There is nothing random about that. You have taken steps to find the best people, so if your employees really do fall neatly into a bell curve, then either you wasted a lot of money on your recruiting effort, or managers have turned promising candidates into less-than-ideal employees.

You could look at this and say, “So what? Forced rankings help me divide up my bonuses.” That’s the argument often presented for using them: it makes decisions about bonuses and pay increments easier. But if you’re using your performance reviews primarily for compensation decisions, not only are you missing out on a lot of their positive effect on performance, you may be doing some damage, too.

When you segregate your employees by arbitrary means, you can sharply reduce employee engagement, especially among the 60% who are in the middle. Knowing that it will be almost impossible to break into the top ranks, they have little incentive to try. At the same time, if you have a lot of strong performers (and if you have done your recruiting right, you should), some of them won’t fit into the top bracket, and will justifiably feel like their hard work and results are unappreciated. If you want to demoralize your people, telling them “You’re great, but I cannot say so officially” is an easy way to do so.

When you increase unnecessary competition into the working environment, you can wreck any chance of meaningful collaboration. Knowing that there are a fixed number of top spots, your best performers are more likely to compete with each other than they are to share knowledge and cooperate on group efforts. For your organization to be agile enough to face today’s rapidly-changing challenges, you need a team that works together, and when your best people hold back, you’re hurting everyone’s chances of being successful.

Employee development is likely to drop off as well, since the people who need it the most see little value in it. Why invest in developing yourself if you know there’s only a small chance your performance change will be truly appreciated? Conversely, what you may see happening is people soaking up as much training and development as they can…and then leaving you for a company where they think their improved performance will be recognized.

Forced rankings are a way for leaders to avoid leading. It can get them out of some difficult conversations, and help them avoid making difficult decisions, by saying “I’m just following the rules.” If you are using a forced ranking system, ask yourself why, and then ask yourself if your performance feedback process is really improving performance.