I have communicated before my dislike for “Neutron Jack” Welch’s “rank and yank” system of performance management. Microsoft’s abandonment of its own forced ranking process that subscribed to Welch’s sour approach hopefully signals its end for good. The continual renewal of the corporate ranks by casting aside the “bottom 10%” of the employee roster seemed so simple. In fact, it was too simple and short-sighted (and a bit inhumane).
A good performance management process sets realistic expectations between a manager and an employee. If those expectations are met, then the employee keeps his/her job. If those expectations are not met, then the manager needs to course-correct with appropriate training and support or make the difficult decision to terminate employment. In this system, I can easily imagine organizations where, because of good management over time, all of the employees are performing well or as expected. Why then force out 10% of the able-bodied work force?
One of the Welch system’s greatest flaws is simply the costs associated with turning over 10% of the GE workforce every year. That’s 30,000 employees every year! Beyond the recruiting costs, there are also on-boarding and training costs as well as more intangible costs associated with the slowing down of projects as newer employees get up to top speed on internal practices and protocols.
I say “good riddance” to forced ranking as an employee management tool. It was about time other large and influential companies recognized it for what it is – wrong.