Understanding Forced Ranking and Stack Ranking in Performance Management Systems

Hi all,

I would like to know the ranking system in PMS. What is the meaning of Forced Ranking? How does it work? What is the bell curve diagram in this context? How should the ranking be done, department-wise or designation-wise?

Can anyone please help me? I need to give a presentation on this by Saturday, so all members, I need your help. :roll:

Hi Seniors,

9 views, but no reply. I need your help. Kindly reply. 🙃

Hi,

The forced ranking system is a method of ranking all employees based on parameters defined to identify outstanding performers among the group. For instance, if your HR department has five managers, after conducting performance reviews, you may receive assessment reports. However, this method might not differentiate the best performers from the rest, who fall into the average performers list, as the assessment would involve normalization. In such a scenario, you would deploy forced rankings among equally performing employees to identify the best performer.

For example, let's say you have one best performer, one non-performing employee, and the remaining three members are average performers. In the forced ranking method, the reporting manager will have to adjudicate the ranking of employees based on their competencies to determine the best performer among them. The fundamental idea is to identify potential candidates for career and succession planning.

I hope this provides some insight for you.

Cheers,
RB

Hi RB has given a clear understanding of stack ranking. Cheers RB.

It is a method in which employees are divided into three groups based on their performance. The groups belong to top performers, average performers, and underperformers. This is divided into percentages.

0____________________20___________________________ ________________________________90____100

0-20 are the top performers (20%), 20-90 are the average performers (70%), and 90-100 are the underperformers (10%). So this is also known as the 20-70-10 system.

Top performers are rewarded, average performers are trained on how to become top performers, and underperformers are either fired or put on an action plan as per the organization's rules.

Jack Welch from GE was the first proponent of Stack Ranking. Later, it was followed by other companies, but to this day, most authors of HR argue that this is not the right way to evaluate performance as it affects employee morale. If you want to know more about stack ranking in detail, please refer to Michael Armstrong's Handbook Of Performance Management.