Forced ranking method in performance appraisal
1. Definition of forced ranking (forced distribution)
Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution.
For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom.
The top-ranked employees are considered “high-potential” employees and are often targeted for a more rapid career and leadership development programs.
In contrast, those ranked at the bottom are denied bonuses and pay increases. They may be given a probationary period to improve their performance.
2. Application of Forced Ranking
GE, Ford Motor, Conoco, Sun Microsystems, Cisco Systems, EDS, Enron and a host of other U.S. corporations have adopted similar policies of this method
3. Advantages and disadvantages of forced Ranking
• They force reluctant managers to make difficult decisions and identify the most and least talented members of the work group.
• They create and sustain a high performance culture in which the workforce continuously improves.
• They increase unhealthy cut-throat competitiveness;
• They discourage collaboration and teamwork;
• They harm morale;
• They are legally suspect giving rise to age discrimination cases.