IBM and forced ranking

I left my job at IBM more than two years ago. Years before that, I had concluded that those running IBM no longer valued the employees. When I started, the company was proud to steer their relationship with their employees by the phrase “respect for the individual”.  Not coincidentally, I haven’t heard that phrase around IBM in a long time. That wasn’t the only reason I left, but it was definitely a major factor in why I was no longer happy working there.

One of the things that led me to that conclusion was the process used for the annual performance reviews.

Rather than evaluating whether an employee performs their assigned job well, the review process is to rank all the employees in an organization who are at the same level, and then assign their grade on a bell curve. There are quotas for each grade within an organization. The executives will deny that all day long, but I’ve talked to managers involved in the process who confirm that as practiced, the process can only end up with that effect.

This isn’t unique to IBM, by the way. Wikipedia calls this the Vitality Curve method. Jack Welch was credited with popularizing it when CEO of GE.  ”Forced ranking” seems to be the more common name for it, and I think a more accurate one.

There are lots of criticisms of this method. Here’s how I viewed it from the employee’s side, and how it made me feel.

While IBM’s implementation of forced ranking didn’t automatically fire the bottom ranked employees each year, they were obviously the first ones considered when IBM wanted to reduce employees. So, in combination with IBM’s strategy of improving results by cutting expenses rather than improving revenues (about which I might write more later), the effect was similar.

At the beginning, this has the effect Welch claimed – the employees not contributing were removed.

But you can’t sustain this. After firing the bottom performers this year, who are you going to fire next year? Did you hire a new 10% of incompetent employees at the same time? So within a few years, you’ve trimmed the fat, and now you’re hacking off the company’s muscle.

This also points out my second problem with this method: people who are doing their jobs acceptably get graded as performing unacceptably. You might say, this just raises the bar so everyone is motivated to do their job better. That might work if there’s always room to do every job better, and the rankings are objective and fair, accurately reflecting how well employees do their jobs. Unfortunately, neither of those are the case.

How are the rankings actually determined? The managers get in a room together and argue about whose employees are going to get the good rankings in the organization. Okay, if you’re a lousy employee, you’ll certainly end up with a lousy ranking in this system, but you would in any system.

If you do your assigned job well, though, that really doesn’t help you much here. Two other, mostly unrelated things have the most influence: if you happen to work for a manager who is the strongest arguer in the room (and likes you), and/or if you happen to have done good things over the year that the other managers have heard about.

Who you work for is mostly a matter of chance. Sometimes you can seek out a transfer to a project with a good manager. Then, as likely as not, IBM will do a re-org the next week and your manager will be replaced with the worst manager in the organization, or you’ll be moved to that manager’s department. (Over my 19 years at IBM, I had more than 20 managers. Very few of those changes were due to my changing jobs.)

Your other route to a good ranking is visibility outside your own department. Some jobs naturally provide that, but many don’t. In that case, your most likely way to get visibility is involvement in crises. Now, if you do your job well, you shouldn’t have crises. A good programmer will write code that just works. Who gets pulled into crises? Those who have done a crappy job, resulting in their product breaking. If you’re one of those people who can make themselves look good in a crisis, even when they might have been the initial cause and had little to do with resolving it, guess what? You get noticed, you get the good ranking, and leave the mediocre ranking for the guy in the next cube who quietly does their job well every day.

One more thing about how IBM used this system: they dedicated the vast majority of their recognition and rewards to those who got the highest level rankings. And they weren’t quiet about it.

Bottom line: those who quietly do a good job get no recognition or respect, and even are at risk of losing their jobs when the next arbitrary cut is decreed.

One thought on “IBM and forced ranking

  1. poirier Post author

    There’s another blog post relevant to this here: http://www.jrothman.com/blog/mpd/2005/03/forced-ranking-is-stupid.html. Actually the best part is Teresa Nielsen-Hayden’s comment. It’s worth reading the whole thing, but this paragraph really captures how forced ranking struck me:

    If an employee has worked hard all year, met their commitments, demonstrated competence, been a team player who helps others, and really put their heart into their work, but because only 20% of their team can get top ratings they’re told that their performance wasn’t as good as it might be, there’s a minor chance that they’re going to feel motivated to try harder. There’s a bigger chance that they’re going to decide the company is stupid, unfair, doesn’t value them, and cares more about sucking up to management than it cares about productive work. It’s very hard to regain their trust after that.

    Reply

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