20-70-10 Employee Stack Ranking

Many companies have used 20-70-10 employee ranking or “stack ranking” as part of the process in performance evaluations.  Some companies once viewed the process as the staircase for success.

Jack Welch used forced employee ranking at General Electric.  He popularized the concept through his writing and consulting.  In a “Bloomberg BusinessWeek article ‘The Case For 20-70-10’“, Jack and Suzy Welch explain the principle for ranking employees into performance categories.

The process of forced ranking includes firing the bottom 10%.  Critics call this process “Rank and Yank.”  Many critics state that “stack ranking” polarizes managers and employees and stifles innovation.

Even though fewer companies use “rank stacking” today (read more via Forbes.com, Peter Cohan), most companies still do annual performance reviews.

According to Fortune/CNNMoney.com contributor Anne Fisher, only two percent of human resources executives say that yearly evaluations are actually useful.
On its company blog, Adobe published an article about its decision to drop annual performance reviews.

The dreaded performance review? Not at Adobe.”

It’s the bane of managers’ and employees’ existence at corporations around the world — the annual performance review.

Adobe abolished its performance review system in favor of ongoing “check-ins.” The story of how it came about and the way it works is a perfect example of how Adobe does what makes sense regardless of trends — and winds up setting some new trends in the process.”

Adobe did a specific thumbs down on stack ranking.

“In most corporations, managers must divide employees into groups — for example, maybe 15 percent of people can be assigned the highest rating. Those ratings then determine salary increases. Employees are also typically ranked, meaning that every interaction with a teammate could be viewed as a competition rather than a collaboration.”

In conclusion, performance feedback is important.  All companies do use some form of evaluations.  Managers must direct employees to focus on the job and on ways to do a better job.  The method of performance review should vary from company to company.  Each company has different circumstances.   For some companies annual reviews work well.  For other companies such as Adobe, regular feedback alone works well.  Many companies use a combination of methods for reviewing performance and giving employees feedback.  Although some companies still use stack ranking in various forms, many companies have found that forced ranking of employees neither creates better employee performance nor gives an accurate of understanding of the skills and abilities of the total organization workforce. 

The Power of Giving Recognition

The Power of Giving Recognition

People who give compliments and recognition are people I remember.

For several years, I have sent out a newsletter.  Two people have regularly given me thanks for my work in creating and publishing that newsletter.  One of these people is a senior executive at The Walt Disney Company.  The other person was the Vice President of Sales at Nestle at age thirty-two and today places more C-level executives than any other corporate recruiter in the country.

In the past week, I got a marketing email from one of my favorite clients.  The president of that company has been a loyal client and friend for twenty-five years.  His company did a terrific job on the email.  I sent him a note, complimenting him on his marketing campaign.

The best boss I ever had moved through levels of greater responsibility rapidly.  He was a four-star Admiral.  I once showed him some work I had just completed.  He said that the work was outstanding.  Then he said, “Of course, I would expect no less from you.”

I have read that the words people most like to hear are the words in their name.  When I greet people, I say their name.  Names are great for communication, so that people know that you are speaking with them.  More important is that, when I say a person’s name, I am giving them recognition.

I compliment a person on their appearance to give them self-confidence and to let that person know that their presence adds value to my day.  A receptionist in my office taught me a nice way to compliment people on their appearance.  What she said was most comfortable for her was for someone to compliment something she was wearing.  I try to remember that suggestion whether I am complimenting a man or a woman.

The real winners in giving recognition are the people giving the recognition.  These people attract people to them.  I remember people when they take time to give me recognition or a compliment.  I find that especially is the case when I have done a large job and few people have said anything about the work I have done.  I also find that I remember people who have repeatedly thanked me for my work or told me I did a good job.

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The Seven Decisions in Making a Great Hire: Experience

The Seven Decisions in Making a Great Hire: Experience

I once heard a person say that they do not know how a trip will turn out until they are on the way back.  Experience is a powerful teacher.  Reading about performing certain tasks, attending classes on those tasks, looking at pictures of a those tasks, and discussing those tasks all combined do not illustrate how a person will do those tasks.  Knowing the experiences of a person who has actually performed specific tasks is a strong indicator of how well a person will do those same tasks in the future.

Additionally, becoming effective at some tasks can only be achieved through experience.  Jockeys can learn to become better jockeys through many methods: coaching, reading, observing others.  However, no great jockey became a great jockey without the experience of riding a horse.

I recently read Empire of the Summer Moon, a book by S. C. Gwynne.  The purpose of the book is to illustrate how experience transformed tens of thousands of Comanches from the American High Plains into the most effective “light cavalry on the planet.”  As successful nomadic warriors and hunters before the Spanish brought the horse to the America, the Comanches developed techniques of warring and hunting on foot. They gained advantage through deception, position, and mobility.  Each day, the Comanches’ nomadic experience was one in which their existence depended on mobility, logistics, strategies, tactics, and weaponry. Although the tools in today’s warfare have advanced with technology, the experiences of the Comanches in moving warriors, supplies, and weaponry to exploit the enemy with surprise, deception in detection, and retreat to safety are similar to the strategies used today with attacks from air bases, which in some cases is thousands of miles from the enemy.

When the Spanish brought horses to America, the Comanches joined their experience as highly successful nomads into the experience of far more successful nomads with their daily use of horses.

For two hundred years, their experiences as nomads made the Comanches an indomitable nation far superior in military power than any other indigenous people who met European expansion.  Thousands of Comanches accurately shooting arrows at full speed on horseback and then being able to move their force hundreds of miles in just a few days was impossible for the Europeans to comprehend at the time.  If you are interested in learning more about successful nomadic people, I highly recommend Empire of the Summer Moon.

So along with talentskillknowledge, and personality, experience is essential part effectiveness performance.  A hiring manager who is skilled at assessing how well experience indicates successful performance in future experience can add more insights to making great hires.

Does the applicant have the talent, skills, knowledge, personality, experience, potential for long-term success, and the personal goals to fit the job?  In the next discussion, I will look at potential.

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