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Forced Ranking: A Response to the Amazon Story

By Rich Wellins, Ph.D.

Richard S. Wellins, Ph.D.

Many of you are familiar with either the books or movies in The Hunger Games series. If not, the theme centers around worker colonies that have been set up in a new world to produce goods, services, and wealth for an elite class of citizens who live in the capital city. Conditions in the colonies are harsh. Each year, a special unit from the Capital City goes to each of the colonies to select a person who will participate in The Hunger Games. The games are a futuristic version of the Roman gladiators. With some very high-tech touches, those chosen for The Hunger Games are pitted against one another until only one person remains. As you would expect, the colonies begin to revolt.

For those of you following the press, a present-day version of The Hunger Games is being played out in front of our eyes at Amazon.  A recent exposé in The New York Times, Inside Amazon: Wrestling Big Ideas in a Bruising Workplace, tells a story of how Amazon is “conducting an experiment in how far it can push white-collar workers to achieve its ever-expanding ambitions.”

Regardless of the negative press this article has garnered, the issue at hand is less about how far Amazon can push its employees, and more about how Amazon and its CEO, Jeff Bezos, choose to manage performance, values, and the company culture. What makes the story attention-getting is the generally positive customer perception of Amazon and the fact that their financial growth is off the charts. They are building new towers to accommodate double the number of employees. But that doesn’t mean that there’s going to be a real place for each new recruit; on the contrary, the message that Bezos is sending is that talent is disposable.

Amazon’s performance management process: What’s wrong?

While many organizations are turning away from a forced ranking process (also known as rank and yank or stacking), Amazon has embraced it. “Each year,” according to The New York Times article, “internal competition culminates in an extended semi-open tournament called an Organizational Level Review where managers debate subordinates’ rankings, assigning and reassigning names to boxes projected onto a wall.” Successive layers’ managers come in to determine the fates of their employees only to leave the room knowing that they, themselves, will be up for review next. Their forced ranking system is paired with an open feedback process where employees are encouraged to provide feedback directly to a peer’s boss.

There are a number of reasons why forced ranking can be toxic in any organization:

  1. Forced rankings are typically based on a single number given during an annual appraisal. Unfortunately, these ratings, based solely on managerial judgment, can be inaccurate and are not highly correlated with true organizational performance.
  2. A single rating or ranking often does not reflect the person’s entire success profile (experience, skills, personality attributes, knowledge) and yet is used to make crucial placement, promotion, and termination decisions.
  3. When companies focus on hiring great people, forced ranking immediately takes the supposed star performers and pulls them into the constraints of a normal distribution curve (20 percent are high performers, 60 percent average performers, and 20 percent poor performers). So an employee may be told after a year—you aren’t the star that you (or that they) thought you were. Even if you escape poor or average rating in those first 12 months, you will continue to be evaluated against both current and new members of the workforce. This is demotivating for both the employee and the manager, who may feel pressured to get rid of valuable talent just to meet a termination quota. When performance rankings are used to make termination or promotion decisions, they fall under labor laws, at least in the US. If protected classes (females/minorities/workers over age 40) receive lower ratings, companies leave themselves wide open for a law suit.
  4. Forced rankings promote sometimes ruthless and unfair competition. They can destroy any sense of collaboration and teamwork in work environments, which are increasingly interdependent. And as employees’ survival instincts kick in, they may do anything to be able to stack up favorably against their peers.
  5. Forced rankings and overall ratings often turn the appraisal into a numbers game as opposed to an open and honest discussion around development and growth.
  6. New neuroscience research shows that a numerical rating or ranking actually triggers chemical reactions in the brain that lead to a fight or flight reaction as opposed to one of openness to feedback.

An environment where feedback flourishes is crucial; however, when coupled with forced rankings and a “bruising” culture, it becomes problematic.

A better way to boost performance

Due to a renewed interest on the part of organizations in improving their approach to performance management, we have focused our efforts on helping them with this growing need. Multiple articles show the increasing dissatisfaction with performance management, but there is a better way which is very different from Amazon’s approach.

Here are some of the tenets of DDI’s approach:

  • Overall rankings and ratings are damaging for the reasons mentioned above. The best approach is a balance of “what” and “how,” evaluating a person on a number of areas. This does not mean there are not poor performers who need coaching for improvement or more drastic action. It does mean that we do not believe in putting people into boxes or labeling a good performer a poor one for the sake of a normal distribution.
  • Performance management is not a twice-a-year process. While it is common to set and review goals on an annual basis, feedback and performance discussions should occur throughout the year, even as frequently as every day.
  • There should be a balance between an open conversation about performance and personal development and growth. Developmental planning is a key component.
  • Both leaders and employees should be trained in the process and “interpersonal skills” associated with effective performance discussions.
  • “Receivers” and “givers” should both be trained in delivering feedback effectively. The use of the STAR concept, listening skills, Key Principles, and alternative suggestions for handling situations, are just some ways we encourage feedback.

Performance Management Every Day Conversation
Do your leaders have ongoing conversations on performance? View the full infographic.

Performance-driven but with a human touch?

The current performance process at Amazon is a direct reflection of the CEO’s values and leadership. For any system to work, it must be based on the beliefs and commitment of senior management, especially the CEO.

It would be wrong to conclude the way Amazon treats people is just fine because they are performing. A recent INC. magazine blog compared the Amazon culture with that of Starbucks, also a high-performing company. Author Justin Bariso points out that, unlike Amazon, Starbucks’ attitude about performance is that: “We are performance-driven, through the lens of humanity.”

The last word seems to be absent at Amazon. But I believe people thrive in a work environment where employees are treated as if leadership understands what the word human really means.

For additional insights, read our white paper, Performance Management Reviewed.

Richard S. Wellins, Ph.D., is senior vice president at DDI and co-author of the book Your First Leadership Job: How Catalyst Leaders Bring Out the Best in Others.

Posted: 10 Sep, 2015,
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