'Rank and yank' still the favourite with appraisers
SURVIVAL of the fittest' is one of Darwin's postulates that seems to have found a permanent place in the corporate lexicon. And the credit for giving a new lease of life to an age old law of nature goes to none other than G.E Supremo Jack Welch. Many novel forms of appraising employees including 360 degree evaluations and grid systems have come and gone, yet the awfully aggressive, and almost tyrannical system of rating employees, the `vitality curve' or the `Rank and Yank' system Jack Welch popularised continues to hold sway in corporate circles. According to one report, as many as one in five Fortune 500 companies, use the controversial employee-appraisal system although it is quite conveniently kept under wraps.
It was Welch who cut off a huge chunk of jobs at G.E way back in the 1980s and earned the nickname 'Neutron Jack'. Welch used what he calls the `Vitality Curve' in order to rate his staff. Today, this notorious trend of hard nosed sacking is highly in vogue in business circles.
Jack Welch's vitality model has also been described as a `20-70-10' system. Under this system, employees in each department are ranked in a 20:70:10 ratio. The top twenty per cent form the creme de la creme of talent and productivity; the middle 70 per cent comprise `average performers'; while the under performers and non performers the bottom ten percent.
The simple premise for the system lies on the assumption that in order to achieve the highest degree of efficiency and nurture the best talent, an organisation must progressively discard or rehabilitate deadwood (non performers) that form the bottom 10 per cent of its workforce, while developing and nurturing the top 20 per cent of its workforce that is most productive.
Year after year differentiation increases the bar, and the bottom 10 per cent gets chipped away. With most under performing and `average' employees out of the way, organisations are free to concentrate on developing the remaining cream of talent.
Countless organisations across the world use the vitality curve to rank employee performance, whether it is to give promotions, decide on raises, or for downsizing.
Many companies prefer less harsh variants of the rating system, choosing to provide training or remedial tutoring to improve the performance of the bottom ten percent, rather than firing them outright.
But critics of the system believe that the 20-70-10 model fails to reflect actual human behaviour. The bottom 10 per cent may not always be under performers. This becomes increasingly evident when after years of using the system there are no `under performing' employees as such, and those with `average' and `above average' performance levels are forcefully ranked in the bottom10 per cent.
Another gripe against the model is that a lot hinges on the criteria managers use for rating their subordinates. Different criteria yield different results, which may not be accurate, let alone fair and just. There is also the danger of organisations facing discrimination charges, especially where forced ranking is allegedly used to weed out older employees.
Many also feel that such a system promotes `cannibalisation', and encourages political power play and horse trade within the organisation.
Various controversies surround the system of forced ranking, and many corporate giants have met their downfall with allegations of misuse and discrimination charges being filed against them over the issue.
Most though agree that when properly used, forced rankings are an effective way to weed out under performers over a two or three year period. But when established and practiced year after year, the rank to yank system might gradually erodes employee morale, diminishing their trust and loyalty towards the organisation. Hence it must be implemented with caution.
BINDU SRIDHAR
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