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Grading on the Curve

There's nothing new about the process itself. Law firms, college faculties and the military have operated under an "up or out" ethos for eons, and a number of companies, including PepsiCo, have used it for several decades.

September 18, 2003
Related Topics: Performance Appraisals, Ethics, HR & Business Administration
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High-visibility lawsuits and Jack Welch's celebrity have brought recent-mostly unwanted--attention to forced ranking. But there's nothing new about the process itself. Law firms, college faculties and the military have operated under an "up or out" ethos for eons, and a number of companies, including PepsiCo, have used it for several decades.

    Its modern history begins in 1999 with the publication of Topgrading (Prentice Hall), by a consultant and industrial psychologist named Bradford D. Smart. In 2001, The War for Talent (Harvard Business School Press) came out. However, forced ranking did not pierce the public consciousness until Jack Welch's autobiography, Jack: Straight from the Gut (Warner Books), arrived in bookstores on September 11 of that year.

    Welch devoted almost an entire chapter to what he calls The Vitality Curve, but what many readers remembered most vividly was his philosophical/emotional argument for forced ranking. "Some think it's cruel or brutal to remove the bottom 10 percent of our people. It isn't. It's just the opposite. What I think is brutal and 'false kindness' is keeping people around who aren't going to grow and prosper. There's no cruelty like waiting and telling people late in their careers that they don't belong-just when their job options are limited and they're putting their children through college or paying off big mortgages."

    Although it is unknown how many CEOs agree with him, what's more certain is that the post-9/11 recession fanned the flames of both forced ranking and corporate reticence on the subject.

    These days, a new question is whether the expected economic turnaround will decrease the popularity of forced ranking. Byron Woollen, for one, thinks so. When times are good and the money is rolling in, he says, people who might be perceived as weak performers are a less endangered species.

    Helen Handfield-Jones, not surprisingly, has a different view. She believes that five years from now, the need for differentiation will be even greater. "As we look down the road, we won't have the senior leadership that we have today. There's a declining population in that age group."

    She adds that 75 percent of all current senior vice presidents will either retire or be on the brink by then, and because of the recent "delayering" of companies, there's a whole tier of managers missing. "So how else," she asks, "are we going to find the people ready to make the leap from plant manager to leading a business unit? Because the skill that's needed in the top 50 jobs at a company is going up all the time."

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