| During World War II, US forces took over islands in the | | | | resource professionals who worked at companies |
| Pacific where the residents had never see airplanes, | | | | with more than 2500 employees and asked them |
| or canned food, or any of the tons of material that a | | | | about how forced ranking worked. Half of the |
| military force needs. The islanders were careful | | | | companies used some kind of forced ranking system. |
| observers, though, and they figured out what the | | | | Respondents to Novations' survey found that forced |
| military did to cause the goods to show up. | | | | ranking caused lower productivity, lower levels of |
| This is what they saw. The military folks would go up | | | | employee engagement, and increased distrust of |
| into towers they'd built and talk into a box. Soon the | | | | leadership. |
| material, or "cargo," would arrive. | | | | If you're going to adopt the practices used by another |
| When the war ended, the military went away and the | | | | company, no matter how successful, you need to do |
| cargo stopped coming. But some of the islanders | | | | some research into why it works there. In GE's case, |
| figured that they could make the cargo come back. All | | | | the answer may involve things you can't replicate |
| they had to do was exactly what the US military | | | | overnight. |
| people had done. | | | | Forced ranking works at GE because there are two |
| So they went up in the abandoned towers and talked | | | | characteristics of the company that support it. First, |
| into the dead radios that were there. Sometimes they | | | | there is a culture of candor. Unlike most other |
| "built" radios from wood or other available materials. | | | | companies, GE values and rewards candid |
| They did everything just like the military and they | | | | conversations about performance. |
| waited for cargo to arrive, but it never did. | | | | GE also has used an extensive and rigorous |
| Those islanders were members of something we call | | | | evaluation system for years. Combine candid |
| "cargo cults." They were bright, observant people who | | | | communication with rigorous evaluation and you get |
| copied a behavior they believed would bring back the | | | | evaluations that don't come as a surprise. In other |
| cargo. It seems silly to us, because we understand | | | | words, people know when they're not performing and |
| what airplanes and control towers and radios are. | | | | don't fit. |
| But it was magic to the cargo cultists and they tried | | | | There's one other thing. Despite the rhetoric, GE |
| the best they could to make it work. Just like lots of | | | | doesn't automatically fire people who are in the bottom |
| managers do with the practices of other companies. | | | | ten percent. There's often the opportunity to improve |
| Everybody, it seems, copies General Electric (GE), | | | | or try a different assignment before firing becomes |
| often in the area of forced ranking. At GE, managers | | | | the option. |
| are required to rank their employees into three groups. | | | | If you want to adopt the practices of another |
| Twenty percent should be top performers. Seventy | | | | company or industry you have two choices. You can |
| percent are in the middle. And 10 percent bring up the | | | | do it like the cargo cults, mimicking behavior and hoping |
| rear. | | | | it will get the same result. Or you can do a little due |
| The idea is that you treat the top 20 percent as stars | | | | diligence and increase the odds that you'll make the |
| and they get the lion's share of the bonuses, stock | | | | right choice. |
| options and rewards and opportunities of all kinds. You | | | | Do a little research. Academics, consultants and |
| work to keep the middle 70 percent engaged. And the | | | | graduate students are doing research all the time |
| bottom 10 percent have to go. | | | | about what works and what doesn't. If you read the |
| This system works at GE, much to the chagrin of | | | | Novations' study as part of your due diligence, you'd |
| many commentators. Because it works at GE and | | | | know that forced ranking isn't the magic it might |
| because GE has been a successful corporation for | | | | appear. |
| decades, some businesspeople decide to introduce | | | | Check out the companies where the practice works |
| forced ranking in some form into their organization. | | | | and a few where it hasn't worked. What are the |
| They want to get some of that GE magic. | | | | differences between them? Which companies are like |
| The science fiction writer Arthur C. Clarke has said | | | | your company? |
| that "Any sufficiently advanced technology will be | | | | If you're still not sure about adopting a practice, review |
| perceived as magic." When you don't understand what | | | | the history of how it came to work in companies |
| goes behind the success of the forced ranking system | | | | where it's successful. Tracing that history will often |
| at GE, it looks magical, and magic always looks better | | | | help you see organizational and cultural pre-cursors |
| than hard work. | | | | necessary for success. |
| So companies adopt the forced ranking system | | | | In this age of management fads, it's easy to take a |
| without paying attention to any evidence about how it | | | | cargo cult approach to adopting some new practice. |
| might work in their place. But, alas, there is evidence | | | | But with a little bit of work and research you can |
| that forced ranking is more likely to create problems | | | | choose wisely which practices you'll adopt and how |
| than to magically create profit. | | | | you'll adapt them to your own company. |
| The Novations Group surveyed two hundred human | | | | |