Dick Grote and “Rank and Yank”: Argument that Performance Management is ‘Hard’, Requires a Perfect World and Perfect Management–Such Does not Exist

Dick Grote of Grote Consulting has posted a video clip (see below) stating that “performance management” is supposed to be difficult. Given that he speaks exclusively to management, this difficulty is supposed to be given only to employees through a forced distribution curve (or “rank and yank” or so-called pay-for-performance systems).

A serious flaw of Grote’s work and of rank and yank is that it does not consider that grave errors will be made with such a system in a country like the United States, with an extensive practice of chattel slavery and pervasive racial discrimination, where there is still income and racial inequality as well as profound power concentration in the hands of a relative few. In such circumstances, rank and yank simply cannot work as it becomes an instrument to enforce illegitimate power and unfair and illegal bias toward members of minority groups. Equality, theoretically construed, does not exist in reality.

Yet, shockingly, rank and yank depends on a presumption of theoretical equality (and that perfect human beings are selected into management–certainly not true).  It is no surprise then that rank and yank has not worked well in any organization in which it has been implemented, except by distributing risk and financial loss to the powerless.

In addition. the civil rights laws and regulations and minute, but at least continuing, social improvements must not be turned back because of unfair “performance management” practices.

Policymakers must be careful.

Employees, also, must investigate potential employers and their management to see if “incentive pay,” “pay-for-performance plans,” or rank and yank is being used in the workplace. If so, an appropriate compensation for the risky, unstable work environment such plans cause is significantly more cash compensation.


Federal Civil Service: Inspectors General of Federal Financial Regulatory Agencies Respond to Congressional Request for Information; IG Reports Vary in Investigatory Vigor

In late March 2014, Democrats of the U.S. House of Representative’s Committee on Financial Services requested that Inspectors General (IG) of the federal financial regulatory agencies provide a report about workplace discrimination occurring at each applicable agency. In addition, the letter from the committee Democrats requested a review of the role of the Offices of Minority and Women Inclusion (OMWI) at each federal financial regulatory agency.

The request followed an early March 2014 article in the trade magazine American Banker, in which it was reported that the Bureau of Consumer Financial Protection (CFPB) had racial disparities in the execution of its staff performance evaluation program.

The table below presents the responses from the various IGs to the congressional request.

Federal Financial Agency Report Number Internet Link Comment
Consumer Financial Protection Bureau American Banker article about racial disparities of CFPB staff evaluations.
Department of the Treasury, Office of the Comptroller of the Currency OIG-15-017 http://www.treasury.gov/about/organizational-structure/ig/Audit%20Reports%20and%20Testimonies/OIG-15-017.pdf
Federal Deposit Insurance Corporation Eval-15-001 http://www.fdicoig.gov/reports15/15-001EV.pdf
Federal Housing Finance Agency EVL-2015-003 http://fhfaoig.gov/Content/Files/EVL-2015-003.pdf
Federal Reserve Board
National Credit Union Administration OIG-14-09 http://www.ncua.gov/about/Leadership/CO/OIG/Documents/OIG201409EqualOpportunityDiversity.pdf Click for blog post on this report
Securities and Exchange Commission 528 http://www.sec.gov/oig/reportspubs/528.pdf Report is thorough, thoughtful, and well done.

[Note:  As of the initial date of this post (January 26, 2015), the IG for the Federal Reserve Board (FRB) and the Bureau of Consumer Financial Protection (CFPB) has not submitted reports. According to the FRB and CFPB IG work plan, these reports are due in in the first quarter of 2015.]

The reports vary in investigatory vigor; this variance is disappointing–all reports on this matter must have an equally high amount of investigatory diligence. The Security and Exchange Commission’s IG was the only one that evaluated the responses from the agency and seeks to obtain substantive responses for areas in which the agency sought further time to provide a response.

Other IGs, for example, the IG for the Office of the Comptroller of the Currency, seemed to simply collect information and report what text was received. The IG for the National Credit Union Administration (NCUA) mentioned the activity of the NCUA’s performance evaluation program (pay-for-performance style) but did not probe further to investigate how the performance evaluation worked and review it for compliance with equal opportunity laws and regulations, including the federal merit principles.

U.S. Judiciary: Chief Justice John Roberts Issues 2014 Year-End Report

John Roberts, Chief Justice of the United States, issued a 2014 year-end report on the judiciary.

The Chief Justice focused on the U.S. Courts and their adaptation to improvements in information technology. Essentially, the Chief Justice explained that the federal court system is and will be slow to adopt new technology to its operations. The goal of the federal court system is to provide litigants fair and efficient access to courts, the Chief Justice stated. The Chief Justice made a reference to the tortoises on the bases of the Supreme Court’s exterior lampposts as a symbol of the judiciary’s commitment to constant but deliberate progress in the cause of justice.

[Comment:  But a tortoise’s pace is very slow, and it is a presumption that the slow pace is for the cause of justice. It can easily become an obstacle to progress as well (in 2014, in particular, the issues with police authority and its effects on the community as well as the judiciary’s interaction with law enforcement and citizens (that is, grand juries) make this point (of the court’s approach as being an obstacle to progress) salient during this period of assessing the fairness of the court system to all citizens).

The Court is as reliant on the consent of the governed as other government institutions, but it is interesting that the Chief Justice did not discuss this aspect in the report.]

Continuing with the report, the Chief Justice identified several technological improvements that the federal court system has adopted:

  • Computer-assisted legal research.
  • Computer-assisted graphics, video, and other technological aids to facilitate communications with judges and juries in the courtroom.
  • Automation of the federal court’s filing, acceptances, and retrieval of documents that each court receives each day (electronic case filing and case management (CM/ECF).
  • Public Access to Court Electronic Records (PACER) allows the public to find court records in a way not possible before CM/ECF.

For the future, the Chief Justice noted that the Administrative Office of the U.S. Courts are planning to develop an updated CM/ECF, which will add a central sign-on feature. Also, the Chief Justice added, the future plans include, for example, automatic calendaring notices to interested parties.

The Supreme Court will develop its own electronic filing system in 2016 or so, the Chief Justice explained. The Court will provide further information about its plans in the coming months, the Chief Justice stated.

[Note 1: Judicial pay has remained at the 2014 level for 2015. See Executive Order 13655, schedule 7 (https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/pay-executive-order-2014-adjustments-of-certain-rates-of-pay.pdf).

Position Pay in 2010-2013 (in dollars) Pay in 2014 (in dollars) Pay in 2015 (in dollars)
Chief Justice of the United States 223,500 255,500 255,500
Associate Justices of the Supreme Court 213,900 244,500 244,400
Circuit Judges 184,500 211,200 211,200
District Judges 174,000 199,100 199,100
Judges of the Court of International Trade 174,000 199,100 199,100


In the appendix to the report, the Chief Justice provides and explanation of the workload of the judiciary. I will focus on the Supreme Court’s workload. Six per curiam decisions were issued during this term in cases that were not argued.

2005 2006 2007 2008 2009 2010 2011 2012 2013
Filings 8521 8857 8241 7738 8159 7857 7713 7509 7376
In forma pauperis 6846 7132 6627 6142 6576 6299 6160 6005 5808
Paid docket 1671 1723 1614 1596 1583 1558 1553 1504 1568
argued 87 78 75 87 82 86 79 77 79
disposed 82 74 72 83 77 83 73 76 77
signed opinions 69 67 67 74 73 75 64 73 67

NCUA and Pay for Performance: IG Report Failed to Provide Necessary, Complete Evaluation and Analysis of NCUA’s PfP Program; PfP Can Be Barrier to Equal Opportunity

The report to Congress (OIG-14-09, issued November 26, 2014) prepared by the Inspector General (IG) of the National Credit Union Administration (NCUA) showed generally that the NCUA was open to investigating potential problems relating to diversity and inclusion issues of its employee rating program (a pay-for-performance-based program). However, the report did not present the structure and rating effect of its pay-for-performance program.

Given this blog’s various postings on pay-for-performance-based evaluation systems, this lack of information is potentially troubling. Pay-for-performance systems can themselves be barriers to equal opportunity. As a result, the pay-for-performance programs cannot be presumed to be without fault. The NCUA’s pay-for-performance program, in totality (structure, operation, and results), should also be audited. In addition, Congress should monitor these agency programs closely as they can interfere with or obstruct goals of diversity and inclusion.

The IG noted on page 16, third full paragraph, second sentence, of the report that management told them that “Employees leave for various personal reasons, including, travel, job fit, and performance.” It is the last word of the sentence that caused me to want more information of the NCUA program. Did the employee leave because of low ratings or did the pay-for-performance program encourage resignations because of the results of the low rating.

There seems to be significant churn in the lower-graded examiners (page 16, third full paragraph), with managers tending to give these entry level workers lower ratings for “lack of demonstrated advanced knowledge, skill, and independence.” But do low ratings encourage improvement or encourage disappointment and departures? If the latter, do people in the lower grades actually advance to higher-graded positions, or do those in higher grades protect their positions by unfairly down rating their subordinates?

Without an examination of the NCUA’s pay-for-performance program, it is hard to evaluate the effect on equal opportunity and achievement of diversity in senior management. The conclusion suggested from the information provided on page 16 is that NCUA has a form of forced distribution rating system (also known as rank and yank, up or out, and so on), with the possible exception that those assigned to the lower ratings are denied pay increases or other benefits rather than being fired. But NCUA must provide more details for a firm determination of what its pay-for-performance program does.

[Postscript: NCUA would be well advised to review the research and ill results of forced distribution systems (for example, at Microsoft and Yahoo Inc.). Also, potential employees should consider overall the employee reviews of their employers at websites such as http://www.glassdoor.com (for example, NCUA and the Federal Reserve Board).]

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Everything we learned from Marissa Mayer on how not to run a company

Alex W.:

Threats and fear as a motivational tool. That’s a good summary of “rank and yank”.

Originally posted on Quartz:

Yahoo CEO Marissa Mayer created a furor when she ordered the company’s remote workers back to the office in early 2013. But that move was minor compared to some of the deeper management issues at the company, according to an adapted excerpt of Nicholas Carlson’s upcoming bookMarissa Mayer and the Fight to Save Yahoo!, just published in The New York Times (paywall).

Mayer’s quarterly performance review system has caused serious problems, as has her tendency to take on too much herself, Carlson writes. The signs of trouble, previously documented by Kara Swisher at All Things D, include employees complaining on an internal message board about having to bend reviews to a bell curve instead of giving accurate assessments.

Carlson provides more detail:

Mayer also favored a system of quarterly performance reviews, or Q.P.R.s, that required every Yahoo employee, on every team, be ranked from 1 to 5. The system was meant to encourage…

View original 446 more words

Dick Grote and “Rank and Yank”: Ranking and of “Calibration Meetings” Provoked Chaos at Yahoo, Inc.; Another Warning to Avoid or Remove Forced Distribution Evaluation Systems

The story of the damaging effects of forced distribution rating systems (“rank and yank”) are rarely discussed. But, because of the ill effects on employee’s livelihoods, policy makers must thoroughly investigate and examine forced distribition performance evaluation systems, primarily advanced by Dick Grote and similarly minded apologists.

The quote from the New York Times Magazine illuminates the chaos of forced distribution and corrosive effect on collaboration and on the organization itself. Simply put–forced distribution, in whatever form, does not work. The reasoning for being forced to give a negative review (that is, an effective notice of termination) to somebody on arbitrary and capricious reasons in so-called calibration meetings is an absolute notice of warning before using such rating systems. (Emphasis, in bold, is from the blog author.)

[Marissa] Mayer’s largest management problem, however, related to the start-up culture she had tried to instill. Early on, she banned working from home. This policy affected only 164 employees, but it was initiated months after she constructed an elaborate nursery in her office suite so that her son, Macallister, and his nanny could accompany her to work each day. Mayer also favored a system of quarterly performance reviews, or Q.P.R.s, that required every Yahoo employee, on every team, be ranked from 1 to 5. The system was meant to encourage hard work and weed out underperformers, but it soon produced the exact opposite. Because only so many 4s and 5s could be allotted, talented people no longer wanted to work together; strategic goals were sacrificed, as employees did not want to change projects and leave themselves open to a lower score.

One of the uglier parts of the process was a series of quarterly “calibration meetings,” in which managers would gather with their bosses and review all the employees under their supervision. In practice, the managers would use these meetings to conjure reasons that certain staff members should get negative reviews. Sometimes the reason would be political or superficial. Mayer herself attended calibration meetings where these kinds of arbitrary judgments occurred. The senior executives who reported to Mayer would join her in a meeting at Phish Food and hold up spreadsheets of names and ratings. During the revamping of Yahoo Mail, for instance, Kathy Savitt, the C.M.O., noted that Vivek Sharma was bothering her. “He just annoys me,” she said during the meeting. “I don’t want to be around him.” Sharma’s rating was reduced. Shortly after Yahoo Mail went live, he departed for Disney. (Savitt disputes this account.)

Federal Employees: President Barack Obama Grants Leave on Friday, December 26, 2014

President Barack Obama issued an Executive Order to grant federal employees an excuse from duty on Friday, December 26, 2014. (http://www.whitehouse.gov/the-press-office/2014/12/06/executive-order-closing-executive-departments-and-agencies-federal-gover)