Forced ranking is a tool which many organisations use to measure the performance of their people, but as Geoff McDonald writes, caution needs to be exercised in its use
Forced ranking is a tool which many organisations use to measure the performance of their people, but as Geoff McDonald writes, caution needs to be exercised in its use
When it comes to ranking talent, I think of this as a tool to help managers communicate with their staff. Even when there isn’t any forced ranking, you will always have people either in the middle, or placed at the top or bottom – so this follows a bell curve where everyone tends to end up in the middle. When you ask managers to force rank, they’ve got to have a number one and a number ten, so they will have to meet with that number ten person and tell them that they are at the bottom of the list.
So the positive side of talent ranking is that it forces managers to be very honest with individuals about their performance and their potential in the organisation. My experience is that, generally, mangers are less than frank when it comes to this. That’s why you always have people being paid to leave organisations – because they’ve never really been told that they’re not performing and it hasn’t been documented that they’re not performing.
However, the negative side is that it is used very much as an assessment tool, and not as a development tool. The trick is to try and use it as both. Let’s take the example of someone who has been force ranked and they’ve ended up at the bottom. Clearly, that’s an assessment and some employees might leave because of it, but for those who stick around, what the organisation is going to do to help them improve their ranked position becomes really important.
Another consideration when it comes to talent ranking is the criteria you employ. In the past these criteria have always been centred on how a person performs from a results point of view, rather than how they do their job: ‘Yes you deliver the results, but the way you go about that is a contradiction to the values and the behaviours we want in this organisation.’Increasingly, if you’re going to rank talent you should bear in mind how employees deliver, as well as what they deliver.
Talent ranking is something you can’t do annually. A lot of organisations have tried to introduce this and enforce it every single year. It’s very useful when there’s going to be a big reorganisation or restructure, as it gives you an opportunity to get rid of your poor performers. By being very honest with such people they often move out of the organisation. You’re then left with your new organisation of people who are not in the lower talent ranks, but force ranking employees who are in either the middle or top again a year later is very difficult. Managers say, ‘Well, we’ve just got rid of all the useless people, as it were, and we’re now left with our average to top performers. I don’t want to have to force rank them again.’
That’s where you must think about a different mindset – one which I prefer to call performance differentiation. This is about the what and the how of performance. It means assessing people’s performance on the basis of what they’ve delivered and how they’ve delivered it. This means I can have more of a developmental mindset in my discussion with the individual. I can say, ‘I’ve looked at how you deliver, I’ve looked at what you deliver and you’re good on the what, but you’re not very good on the how.’ Then it becomes a discussion about trying to move them forward in the performance matrix.
HR has a critical role to play in outlining how managers undertake performance differentiation. As well as guiding the process and defining what values or behaviours are measured, HR has to look at what we mean by delivery of results. Do we mean delivery of results in one year, or is it about a consistent delivery of results over a three year period? That reinforces my argument to be doing this kind of work every two or three years rather than annually, because what you’re looking for is consistency in behaviour and consistency in results, over a period of time.
In my experience, managers absolutely lend their support to this kind of process. In our organisation the performance matrix tool that we’ve developed has allowed managers to have open and meaningful discussions about their talent and where their talent sits. It also allows them to set development plans for their talent in terms of either how they’re delivering or what they’re delivering.
As long as the what and the how criteria are very clear in what you’re measuring, if somebody does end up being low on both, then the first discussion is about development – not about how we’re going to get rid of them. That’s why I prefer performance differentiation rather than forced ranking, because the forced ranking tends to become ‘I’m right down the bottom, so out I go’.
While I am somewhat surprised by the degree to which the HR function is still coming to grips with its role with respect to talent management, I think HR is ready to provide line management with some tools on how to better differentiate the performance of their talent. Unilever managers, for example, have really embraced the performance matrix tool because it has given them some really objective criteria which they can discuss their staff. It has helped them to set expectations for people in terms of how they’re going to be measured from a performance point of view. It also has allowed us to really show the organisation from a symbolic point of view that we are going to live according to the values that we talk about. Often you have all these values plastered on the walls, but they are never brought into measuring the performance of people.
Geoff McDonald is based in the UK as vice president, leadership supply for Unilever, and serves as a member of Human Resources magazine’s editorial board.
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