Forced Rankings Are for Winners!

Tim Sackett Performance, Tim Sackett

Let me just begin by saying I love Forced Rankings – hell, I would force rank my kids if my wife allowed me (talk about getting your kids to perform better – “Hey, Billy, you better step it up, if you ever want to eventually change Dad’s adult diapers!“).  Insurance giant, AIG recently made the decision to compensate its employees based on a system that grades their performances numerically. The rankings would then be used to determine their annual bonus (read the NY Times article).  From the article:

The new compensation plan, called a “forced ranking” system, is the brainchild of Robert H. Benmosche, A.I.G.’s chief executive, who has repeatedly mentioned since joining last year that he would change the way the firm doles out bonuses.

Similar systems have been used elsewhere, notably General Electric, a company known for the regimented way it grades its employees. In fact, Mr. Benmosche first learned of such a plan when he worked with a former G.E. employee at Chase Manhattan Bank in the 1970s. He later put it into effect at MetLife when he was its chief executive…

“These ratings will help ensure that our people are accountable, recognized and rewarded for their achievements,” the A.I.G. spokeswoman, Christina Pretto, said in a statement. A.I.G. has begun applying the new payout plan to an initial group of several thousand employees who are set to receive bonus payments next month for their 2009 work. The firm then expects to introduce the system to the rest of its work force, numbering more than 100,000 employees worldwide, over the course of the year.

Now, I like Forced Rankings for a couple of reasons:

1. I have experience using them in a large corporate setting, where it created an environment of constant improvement, innovation and high energy.  Everyday I came to work, I was pushing to make a difference, and yes, as an HR Pro (who was also being ranked against my peers) I was well aware of where I stood in relation to my peer group.  Did it cause me to have some pressure to perform? Yes. Did that pressure bring out the best in me? Yes.  Might that pressure not bring out the best in someone else? Yes.  But, as a company, you decide on what you want your culture to be, then you hire to that culture.

2. “I’m a Winner, and winner’s get to do what they want!”  (My Favorite Clip from Legend of Talladega Nights – The Ballad of Ricky Bobby)  It’s really the great American way.  It’s about performance, Stupid!  In the end, we want all of our organizations to be successful – and we get there through superior performance of our associates – not through mediocre performance of our associates.  Force Rankings show us who the winners are (within our own environments).  Now, you still might only be the tallest of the seven dwarfs – but dammit, you’re still the tallest!

Forced rankings do something that HR Pros aren’t comfortable with, they do something that we really don’t want to talk about when we get together at the pub after work… but in the end – Forced Rankings show us who really is the best (based on whatever criteria your organization has chosen to decide what “best” is). And although everyone likes to say they’re the best – when you base it on metrics, and everyone has the same metrics, then you put it all down on paper – the numbers don’t lie.  You’re either first – or you’re not.

I’ll stick with Ricky Bobby by saying – “You’re either first or you’re last” – because in the end, if I’m not first, I didn’t do enough to win, to be the best – and that’s why I go to work each day, to be the best.

Now, when will those FOT forced rankings come out?