Reference no: EM132176057

Forced ranking is a performance appraisal system popularized by Jack Welch when he was CEO of General Electric. It is a system that has been given the derogatory label of “rank and yank” by its critics. The intent of the forced-ranking system is   to improve the performance level of an operation by getting rid of the bottom 10 percent of performers and hiring replacements who will perform at a high level. Ranking judgments can be made in a variety of ways. For example, a forced distribution can pre-assign a set percentage of employees that must be placed into categories such as “most effective,” “average,” and “needs improvement.” Alternatively, a simple ranking of workers from best to worst can be used. Top performers may be rewarded and offered promotion or training. Low performers may be given a warning or terminated.

1. Do you think forced ranking such as incorporated in the rank and yank system is a good performance management system? Why or why not?

2. Part of the forced-ranking label reflects the intent to force distinctions among worker performance levels. In an absolute-rating system (where supervisors make judgments about an employee’s performance based solely on performance standards), everyone could be rated “above average.” Does this difference between the absolute- and relative-rating approaches (where supervisors compare an employee’s performance to the performance of other employees doing the same job) mean that the absolute performance judgments are wrong? Explain.

3. As a manager, would you prefer to rely on an absolute performance rating system or a relative system, such as forced ranking? Why?

4. Are there any circumstances where a relative rating system such as the rank and yank can be effective.