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Forced Ranking: More Tips for Staying Out of Court
May 23, 2008
By Sarah Boehle
The June 2008 issue of Training featured an article, "Keeping Forced Ranking Out of Court," on the legal ramifications of forced ranking, a performance-based comparative evaluation tool. Here are some additional tips to help you navigate the legal minefield that may result from implementing such a system:
• Conduct a statistical analysis of forced ranking results before taking action. To minimize the risk of employment-related claims, most forced ranking experts recommend that companies review the results of their ranking system to determine its impact on the workforce as a whole and on statutorily protected groups of employees, such as older workers, women, and people of color.
Sara Goldsmith Schwartz, an employment law attorney and managing partner at the law practice of Schwartz Hannum PC in Andover, MA, recommends that this analysis take place before decisions related to forced ranking are finalized and before action is taken with employees. She also advises conducting the analysis through legal counsel to protect the confidentiality of the data.
• If your results point to the fact that forced ranking had a "disparate" and negative impact on a protected group of employees, what should you do? "Yes, you are in a tough position," says Kimberly Moore, a partner at Frisco, TX-based law firm Strasburger & Price LLP, "but before you take any action, you need to vet the results with counsel you trust and perhaps hire someone from the outside to look carefully at the results and ensure that the disproportionate impact was legitimate and that the rankings were not the result of biased decision-making."
This process might involve interviewing those responsible for ranking. "It doesn't happen often," says Moore, "but in some organizations, discrimination does occur." An objective third-party reviewer, she says, can ascertain whether biased decision-making entered into the process.
If, after all this, your bottom-line analysis reveals that your data are solid, go ahead and create documentation proving the process wasn't biased and proceed, Goldsmith Schwartz advises.
Former General Electric exec Dick Grote, who is now president of Grote Consulting Corporation in Frisco, TX, agrees. "If your statistical analysis reveals that one particular group of employees has ended up with a mean performance rating that is slightly lower than that of the general population, it's normal and advisable to question what to do about it. But the question you should ask is, 'Is there any reason to believe the process was not followed the way it was supposed to have been?' If there is no evidence to suggest it wasn't, you stop and say, 'We did the job right.'"
• Communicate the shift upfront. Experts advise giving employees ample notice of the new policy before ranking-related decisions are made. This includes clearly communicating the purpose of the process; its objective and measurable expectations; how rankings will be used; the consequences, if any, of a low ranking; and reminders that a "good" grade does not change an employee's at-will employment status.
"This is where companies shoot themselves in the foot all the time," says Grote. "Take Sally, who has received very good appraisals—exceeding expectations—for the last 20 years. How good a job she's really doing, nobody knows. But to avoid confrontation, her boss always rated her very highly. Now, with the new ranking process, it turns out that while Sally is doing OK, she's not doing nearly the job nor does she have the same potential as other people on her team. So for the first time, Sally is told she is seen as a C player. Particularly if there is a reduction in force aligned with forced ranking, Sally says, 'Wait a minute. I've always had very good performance appraisals. Now they are telling me I am a C player, so either they are wrong or it must be something else. Well, maybe it's the fact that I'm 48 years old or that I'm a woman. Maybe it's because my last name is Gonzalez.' See where we're going with this?"
• To avoid such situations, Grote advises being brutally honest. "Explain that in the past, one sin the company was guilty of was not really telling people the truth. Inform them that you have revised the process in order to drive truth into it. Then, share the criteria against which ratings will be assigned, and explain what the criteria mean. Tell employees that these criteria—such as billable hours, number of clients brought in, and number of community service hours—are things the company has always said are important, and that it now intends to hold people to them and see how they do both against them and vis-a-vis their peers." Give them ample warning, too, says Grote, that their ratings likely will look different than they did before. "After all this, most people will understand the rules have changed and a new day has dawned."
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