Stack ranking methodology12/3/2023 ![]() But that’s precisely where the problem with stack ranking lies in the workplace: Even on a team with the same objectives, people play different roles and perform a range of tasks. Demotivating the majority of your workforce is clearly not a desired outcome of a fundamental performance management process.Īdditionally, in the case of learning curves in school, stack ranking makes sense because students share the same learning objectives, materials and test questions. While the few employees at the high end of the curve may be motivated to continue coming out on top, most employees are demotivated by receiving a 3 - meets expectations - on a scale of 1 to 5. Those employees are put on performance-improvement programs and “managed out” of the company. Since this system requires managers to assign their subordinates into buckets using a predetermined formula, every manager is forced to put a certain percentage of their workers in a bottom bucket. While employees may not understand the exact algorithm behind their company’s stack ranking system, they will likely remember this concept from their days as a student when they were “graded on a curve.” This means that the actual breakdown of results has to ensure that a certain number of employees are below average and a certain number are above average. Now GE has jettisoned annual performance reviews altogether, opting for a performance app instead, in response to a changing workforce as millennials came on board in greater numbers. Originally conceived as a way to force managers to make tough choices and create competitive, fast-paced environments, stack ranking mandates assigning a certain percentage of employees into predetermined performance levels - typically 1 through 5, with 5 denoting “exceeds expectations” and 1 rated as “does not meet expectations.” This style of ranking was popularized by GE under esteemed former CEO and management guru Jack Welch. Despite the move away from this system, stacked ranking is still a go-to performance management approach for many companies that are unsure of how to evolve their performance management processes and systems. ![]() It was formerly used by major brands like Accenture, IBM, Adobe, Deloitte and Microsoft. “Stacked ranking,” also known as “forced distribution,” was once the standard way to evaluate employee performance.
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