Ford alters “forced ranking” system – Brief Article
Is “forced ranking” the winning formula in the war for talent? Ford has decided to alter the system after it drew at least six lawsuits.
“A company that bets its future on its people must remove the lower 10%,” says one of the system’s greatest proponents, GE’s Jack Welch. Doing so, Welch says, will raise the performance bar and increase the quality of leadership. At Ford Motor Co. the Performance Management Process has helped to avoid the layoffs announced recently by GM and DaimlerChrysler. It was used to evaluate about 18,000 managers and supervisors, who were graded A, B or C. It was mandated that the lowest 5% would receive a C, which could mean lost bonuses or raises; two could mean dismissal. CEO Jacques Nasser defended the system as he made the announcement, saying other systems let people “languish for years without knowing where they stand.” But employees charge that it was meant to weed out older, white, male workers as Ford strives for more diversity in its workforce. And an HR Executive perspective on the subject suggests the system breeds “lifeboat discussions” (decisions based on which employee a supervisor would like to have s tuck in a lifeboat with them) and “management by fear.” But with a downturn in full swing and huge layoffs around the corner, says the article, forced ranking, like it or not, will increase.
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