From the Director’s Desk: The Practice of Employee Forced Rankings

No single issue was more controversial in my time in corporate America than the practice of forced ranking of employees. This practice was rolled out in major companies in Chicago more than 15 years ago. Most engineers found it distasteful and subject to abuse but nevertheless it was the rationale used for many years for merit increases, promotions, demotions and terminations and for the high potentials, preferential treatment with access to services like executive coaching that the lower performers would/could not access. I am told that in some companies, this process helps determine who is eligible for tuition reimbursement.

Business Insider’s article “Microsoft and GE Dropped this Management Practice Years Before it Landed Yahoo in Hot Water” describes how the process is starting to be dropped by some of the largest and highest tech companies in the US and yet retained by others that are now finding themselves in trouble.

An interesting study would be: for those companies that adopted these practices, how did they perform over time against the overall market?

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