Forced Ranking: Making Performance Management Work

By: Dick Grote

Harvard Business Chool Publishing

Trained as an industrial engineer, Grote is one of America’s most respected and best-known authors, consultants, and speakers. He specializes exclusively in leadership, performance management, and building organizational excellence. He joined General Electric after college and graduated from GE’s acclaimed Manufacturing Management Training Program. Dick spent a total of fifteen years with General Electric, United Airlines and PepsiCo, the last five as Frito-Lay’s (a division of PepsiCo) Corporate Director of Training and Development. His other published works include The Performance Appraisal Question and Answer Book and Discipline Without Punishment. He is Chairman and CEO of Grote Consulting Corporation.
In this volume, Grote examines a concept–forced ranking–which began to receive increasingly greater attention when advocated by Jack Welch during his tenure as CEO of General Electric. It is important to note that Grote is by nature and training an empiricist in that he rigorously observes real-world experience (his and others) rather than relying almost entirely on theories, hypotheses, assumptions, etc. He is also a pragmatist in that he is determined to learn what does and does not work and also, why. In essence, GE’s version of forced ranking has a 20/70/10 performance measurement-ranking scheme: 20% are the best, 70% are vital, and 10% are at the bottom. (Reportedly, those in the last group are strongly encouraged to seek new career opportunities but, if necessary, terminated.) Grote notes that this ranking scheme has some obvious advantages and has been adopted (usually with some modification) by other major corporations.
Grote recommends an alternative ranking scheme that he explains in sufficient detail. It remains for each reader to determine (a) whether or not forced ranking is appropriate to her or his own organization and, if so (b) which ranking scheme would be most appropriate. Grote can assist with making both determinations. As Grote duly acknowledges, forced ranking is certainly not for everyone. Moreover, what worked at GE during the Welch years may not have been appropriate for most other organizations then or appropriate for GE now. (Presumably, over the years, GE’s senior management has made the necessary modifications. The six questions just posed must be answered first before making a decision about whether or not to implement some version of forced ranking enterprise-wide.
Grote concludes his book as follows: “Conventional performance appraisal has an important place in the talent management palette of any organization. So does forced ranking. Neither process by itself is complete; both have limitations. But together they can provide an accurate and well-rounded picture of the strengths and weaknesses of each member of the team.” Senior-level executives in most organizations continue to insist “people are our most valuable asset.” Grote challenges them to determine precisely what that total value is...and to do so with metrics that are realistic, consistent, and equitable for everyone involved. 

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