It worked for GE!
Jack Welch is generally blamed/credited for the forced rank, ‘rack and stack’ approach to performance assessment. In its purest form a bell curve is imposed at all levels of the org with a forced percentage of people at each performance level. The gruesome details are all over the internet, including on Wikipedia.
Maybe this works great when you’re building jet engines and selling light bulbs. It is a bad way to make software! In this system, your top team in the entire company has to have one piece of toast.
Thank you, Donna!
One of the truly great things that my employer has done is to shift us entirely away from this method. We now practice ongoing feedback . Donna Morris has written and tweeted about this quite a bit. Here’s a nice summary on slashdot. The comments are gold!
— Donna Morris (@DonnaCMorris) November 29, 2013
The right way to do this is with continuous feedback and an engaged get well process for low performers, certainly not at the end of the year.
In a fascinating linked in article about how Marissa Mayer refused to fire 5000 ‘yahoos’. She stood up at a company meeting and said ‘No’, ‘No’, ‘No’ when the topic of massive layoffs came up. She told the board:
Mayer told them that layoffs of any kind, let alone 35 to 50 percent cuts, would be too damaging for employee morale. She said that Yahoo’s basic infrastructure was so byzantine and jerry-built that it would be unwise to blindly rip whole teams of people out. She said Yahoo was going to need all the talent it could find to turn around, and she didn’t want to risk putting good people on the street.
Byzantine! When was it ever good to be Byzantine?
However, it turns out that what she did instead was to enforce stack ranking, with predictable results. I think I have to give her a pass here, since she did something that was right for the technology (not cause chaotic departures) and was better for the people (low performers out!).
if you are not trying to do a massive turnaround you want to stay away from the stacks.