Usually credited as a Jack Welch idea, Rank & Yank refers to an employee evaluation system where workers are ranked against one another and those who are graded lower are then yanked from their jobs; as in fired. Proponents claim that this is a fair method to weed out deadwood and drive organizational performance.
The premise is that most human traits are distributed in a bell shaped or normal curve, with most clustering around the center or the 50th percentile. There are many fewer at the lower and higher ends of the curve. Normal distribution holds true for many human characteristics like height, weight and intelligence. For example, standardized intelligence test scores pile up around the 50th percentile, marked as 100. In other words, an IQ score of 100 corresponds to the 50th percentile and is considered average. Go out three standard deviations (set at 15), to 145 and we find the intellectually gifted in the 99th percentile.
The central flaw with the Rank & Yank premise is that these normal, or bell shaped, distributions are what we find for an entire population without screening or selection. Do you think the height of top level basketball players is normally distributed? If you do, you have never watched a game played by very tall men and women. The players were selected, in part, because of their height.
The same principle holds true for business. It is not like HR professionals open their doors to everyone, rank their performance, fire the poor performers and keep everyone else. Yet, that is what Rank & Yank proponents would have us believe.
Although imperfect, HR professionals collaborate with business line executives and carefully select people they believe will be high performers. Sometimes they get it just right and an entire team of high achievers is assembled. It makes no sense to force supervisors, or even worse team members themselves, to be forced to rank every one and fire those with lower rankings. It is quite possible to be firing capable people and then searching again. What if there is no deadwood?
One of the unintended consequences of Rank & Yank is that business line leaders will select team members they anticipate will be low performers just to fire them and protect other members of their team when the time comes. Rank & Yank also undermines team work and collaboration. Why would one team member want to see another succeed if it means helping him or her get a higher ranking, thereby jeopardizing the collaborators job security?
Clearly, Jack Welch had some good ideas that drove GE’s success when he was CEO. But, Rank & Yank is not one of them.