Making Forced Ranking Work, Part One
Dick Grote’s new book, Forced Ranking: Making Performance Management Work , argues that forced ranking doesn’t have to be a dog-eat-dog Darwinian exercise.
Here, from Appendix A to the book, is a CEO’s memo to participants in the ranking process. The memo was sent to all employees who were to be assessed in the company’s initial forced ranking process. The objective was to build understanding and acceptance of the new procedure.
Grote notes that this memo and other tools he shares in the book’s appendices "resulted from my work in developing and implementing a major forced ranking system with several large organizations. Only the names of the companies and other identifying details have been changed to preserve their anonymity."
To: All Acme Employees in Salary Groups 14 and above
From: [name of CEO]
Date: February 19, 2002
Subject: Acme Leadership Assessment Program
Next month, we will initiate a new forced ranking procedure that is designed to help us better identify Acme talent. In this Leadership Assessment Program, Acme’s senior managers will use a forced ranking process to identify:
the top 20 percent of all Acme managers so that their career development can be accelerated;
the vital 70 percent — the great majority whose strong performance is essential to keep Acme competitive;
the bottom 10 percent whose talents and skills will be best used in other jobs or in other organizations
This program will benefit everyone who is involved. For those 90 percent of Acme managers who will end up being ranked in the top two groups, the ranking process will confirm the importance of their contributions. For those ranked in the top 20 percent, this program will highlight the talent they bring to Acme and accelerate their development. And for the 10 percent who are ranked in the bottom category, this process will allow the person to move to a job that better matches his or her skills, whether inside or outside the company.
The criteria to be used for this ranking procedure will be based on three of the most critical Acme Values (Execute with excellence, Passion for results, and Succeed with people) as well as the individual’s ability to make tough decisions. In the forced ranking discussions, consideration will also be given to such important aspects as the individual’s past performance, promotability, and intellectual strength.
The ranking decisions will be made by the vice presidents of the various Acme departments who are most familiar with the individuals under review. Each person who participates as a ranker will undergo several hours of training to assure accuracy, fairness, and consistency. In addition, the most experienced HR managers who serve the various functions will sit in on the ranking sessions to provide additional input, as will members of the corporate HR staff. Finally, [name of Vice President – Human Resources] and I will be active participants in every session.
We are taking every step to assure the success and the fairness of this process. We have reviewed all of our plans with internal and external legal counsel and have engaged an experienced consultant to help us design the procedure and facilitate the meetings. We are requiring all meeting participants to attend a training program before they participate in a ranking session. We are using the key criteria from our Values in Action as the basis for our decisions. We will discuss the results with every person involved as soon as the ranking discussions are completed. And I personally will play an active role in every session.
Because the senior leadership of any organization has the greatest responsibility for achieving organizational results, we will be using the process this year with all individuals in salary groups 14 through banded, including my direct reports. In future years we may extend the program further, but we will start with those whose impact on our success is the greatest.
Appendices A and B excerpted from Forced Ranking: Making Performance Management Work, by Dick Grote. Excerpt copyright 2005 by Harvard Business School Press. Reprinted by permission of Harvard Business School Press from Forced Ranking: Making Performance Management Work, copyright 2005 by Dick Grote. All rights reserved.
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