Performance appraisal systems have their pros and cons, which depend on the work force, company sizes and philosophies, occupational groups and performance management philosophies. The forced distribution of evaluating employee performance receives criticism for its hard line approach to cultivating employees' skills and inattentiveness to employees struggling to perform their jobs successfully.
The approach to performance management referred to as "forced ranking" or forced distribution is the practice of evaluating employees to place them in one of three groups. This practice is based on the theory that 20 percent of the work force are high performers and should, therefore, be groomed and developed to become leaders within the organization. The average workers, who comprise 70 percent of the work force, are employees who are dependable, reliable workers who may or may not have the aptitude to move into the top 20 percent. The bottom 10 percent of employees are the ones who don't have a future with the company. Supervisors using the forced ranking method must classify workers into these three clearly defined groups.
Improved Workplace Performance
The biggest proponent of forced ranking, or differentiation, is former GE's Chief Executive Officer Jack Welch. He claims forced ranking improves employee performance because everyone is racing for entry to the top 20 percent club. The arguments against forced ranking address fierce workplace competition that removes any possibility of team building. In an article the Harvard Business Review published, Management Consultant Dick Grote states: "Many critics of forced ranking have acknowledged that while the procedure may in fact improve the overall quality of a company's workforce, it may do so at a steep price, producing adverse consequences in such areas as employee morale, teamwork and collaboration, the unwillingness of applicants to sign on with an employer who uses a forced ranking process and shareholder perceptions."
Such fierce competition can manifest itself as low employee morale, which affects employee performance and job satisfaction. Employees in the bottom 10 percent of the work force aren't ushered out immediately after the forced ranking appraisal, however, being identified as one of the employer's least valued employees has a significant impact on employee engagement. In Cary Silverstein's article entitled, "The Good, The Bad, and The Ugly: Forced Distribution in Performance Reviews," he states: "Forced distribution also creates unhealthy competition among peers. Knowing that there is always a percentage at the bottom who will be forced out, the competition for ratings causes fear and selfishness among the workforce."