The Folly Of Forced Rankings

from the a-management-crutch dept

Back when I was in college I worked a summer job in the marketing department of a major direct mail catalog company. One of my jobs was to manage the “cost savings” list – which was a big spreadsheet that basically showed how much money each product manager had “saved” (and yes, the terms was used loosely) the company. For the previous 3 quarters, at some random point the VP of Marketing had requested that list, and then fired the person who had saved the company the least amount. As you can imagine, this led to quite a bit of fighting over what counted as savings and lots of people wanting to take me out to lunch to find out just where they stood on the list. Since then, I always cringe when I hear about companies that have “forced” rankings systems in place where they rank all employees and then ditch a certain percentage of them. It seemed obvious to me that such a system is ultimately likely to make a company fire quite a few competent people who should retain their job. The costs associated with such “bad firings” seems very high. Now, Strategy+Business has a very interesting article pointing out that this is only one reason why forced rankings are very bad for companies. It might (under some circumstances) be useful for a onetime cleansing, but after that you’re likely to be doing a lot more harm than good. They also argue against the faulty reasoning used by people who support such systems. If you work at such a company, or are thinking of implementing such a system, it’s worth reading.

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