Rank and Yank / Forced Distribution–Dick Grote: Giving Advice on Bad Reviews—Agree with Poor Rating

[Note:  This blog has covered Dick Grote’s wicked “rank and yank” program previously.]

Dick Grote has authored another article on “rank and yank,” “What to do when you think your performance review is wrong” (published in the Harvard Business Review (March 7, 2017)). This time the defense of the system is indirect—informing the recipient of a “C-Bucket” rating to accept it. Indeed, as Grote states in the article, nothing the employee argues against the rating is likely to change it.

Indeed that is true in the rank and yank process. The decision made in the calibration meeting for managers is final. Those in the C-Bucket receive negative ratings in order to convince them to quit.

Bucket (rank)

Percentage [“vitality curve”] (amounts can be adjusted)

Effect

A

20

Lavish rewards, encouragement

B

70

Little to paltry increase

C

10

Pressure to quit, firing

Because of the calibration meeting, where managers rank employees, changing a rating means changing it for others, given that rank and yank is a rigid, inhuman, and employee-abusive system.

rank_yank
Artist: Michael Sloan

A key Grote quote:

“But what if a company’s forced ranking procedure, honestly and objectively done, reveals that the blacks or women or disabled employees just aren’t as talented as the white ones? Should they do what some Harvard professors are said to do and award A’s to all the blacks, just to keep them from squawking?” (Grote, page 4 (a quote from a previous post). (Note: Consider this statement from Grote with the ever-present and persistent legacy of slavery and Jim Crow subjugation in the United States of America.)


Grote offers three options for an employee facing an unacceptable performance rating:

  • Accept the rating (Grote preferred).
  • Disagree with the rating (Grote disfavored this option because the manager is invested in the rating, errors look bad on the manager (rather interesting an aggrieved employee must defend unacceptable management behavior, while the employee is expected to satisfy any whim of the manager).
  • Quit (Grote advises for people who get c-bucket ratings to go on a “decision-making” leave to decide either to attempt to fulfill the impossible to meet expectations or quit. The resignation of the employee is the ultimate goal.)

While Grote thinks managers should be given absolute authority in performance appraisal, the personnel record is the property of the employee. The employee has the right to state what is allowed in that property; hence, the reason why employees must sign reviews. The company merely has possession of the employee’s property—the contents of the file.

Save

Advertisements

Dick Grote: “Rank and Yank” Apologist Disagrees with Holacracy. Why? Holacracy Eliminates the Management Class

In a Bloomberg BNA article, “Is a Manager-Free Company a Good Idea?” Dick Grote, the creator of a management-focused and -dependent forced-ranking system (also known as “rank and yank), disagreed with the implementation of holacracy. (Of course, the success of holacracy means the end of the management class; employees will govern themselves.) What was delightful to experience in reading this Grote quote (below) is the wish for Grote to save managers’ jobs while relishing in the deliverance of abusive treatment and pink slips to rank-and-file employees.

“I think there’s a core flaw in the concept” of holacracy, Dick Grote, founder of performance management consultancy Grote Consulting Corp. in Frisco, Texas, said in a Feb. 16 interview with Bloomberg BNA. “The flaw is the abandonment of a structure, hierarchical management, that has worked for thousands of years.” He cited figures as diverse as Moses and Julius Caesar and organizations like the Catholic Church as examples of successful use of hierarchy.

“There are bumps in the process, but there is nothing that has come along that beats hierarchical structure,” Grote said. Experiments like Zappos are “like trying to put 1800s Shakers into modern corporate culture,” he said.

Moreover, Grote said, employees are terrible judges of their own performance and need immediate supervisors for a realistic performance appraisal. All employees want to know “one, what do you expect of me, and two, how am I doing at meeting your expectations? Organizations have an ethical obligation to answer those questions,” Grote said. “Holacracy removes the ability to give that to people.”

 

rank_yank
Artist: michael sloan

 

Grote’s system bolsters and magnifies management power. However, should the employee be expected to self-manage their tasks, management power is reduced. Likely, there would need to be a systems coordinator, but, definitely, the number of managers would be sharply reduced.

How interesting that Grote is so fast to fire employees, but at the same time is protective of management positions. What a juxtaposition! Yet another example of the total failure of the rank and yank system.

Department of Defense: General Schedule May Have a Long Tenure, But Still Effective; Dick Grote-Style Pay-for Performance is a True Failure

Artist: michael sloan
Artist: michael sloan

It seems that the idea of pay for performance-no matter the numerous failures (documented, in part, in this blog)-has yet again reared its failed head at the U.S. Department of Defense (DoD). Pay for performance is to replace an “aged” General Schedule system, the DoD proponents posited. A system’s age is irrelevant; whether it functions in a way that those it applies to can accept is more important.

The DoD proponents propose undemocratic, unfair, and dictatorial pay-for-performance policies that betray the democratic republic foundations of the country. In addition, the DoD proponents should never forget that the employees are also United States citizens and permanent residents and taxpayers and that agencies have authority through the consent of U.S. citizens and residents.

Bucket (rank) Percentage (amounts can be adjusted) Effect
A 20 Lavish rewards, encouragement
B 70 Little to paltry increase
C 10 Pressure to quit, firing

The DoD, and their bosses in the Congress and in the Executive Branch, should tread carefully in any move to alter the General Schedule unless the replacement can be well accepted as the General Schedule. Pay-for-performance systems are at their foundation unfair, subject to management abuse and manipulation without equivalent accountability for those managers, and render the employee powerless and subject to management ambush and destruction of employee livelihoods.

Dick Grote’s Forced Ranking Amazon.com [New York Times article] Department of Defense [Washington Post column by Joe Davidson]
Anytime Feedback Tool-allows co-workers to send feedback to one’s manager without the targeted employee’s knowledge. Jeff Bezos, chief executive officer of Amazon, is an investor in Workday, which seeks to bring this “gem” to other organizations which purchase it. “Force of the Future launches a strong attack on the General Schedule, saying it “is wholly inflexible and ill-suited to attract critical skills or motivate high performers.” In the name of fairness, “the promotion system primarily rewards time in grade,” the document adds, “instead of identifying, rewarding, and motivating high performers, the GS system rewards mediocrity.” ” [Note: Dick Grote uses similar language. http://www.groteconsulting.com/the-rationale-for-forced-ranking/]
Manager sets tough objectives and expects the employee to figure out how to satisfy the manager’s expectations “Molly Jay, an early member of the Kindle team, said she received high ratings for years. But when she began traveling to care for her father, who was suffering from cancer, and cut back working on nights and weekends, her status changed. She was blocked from transferring to a less pressure-filled job, she said, and her boss told her she was “a problem.” As her father was dying, she took unpaid leave to care for him and never returned to Amazon.

“When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.”

“Officials want managers to have more authority so they can “divest low performers” —  in other words, fire them. “The current performance management system does not effectively hold low performers accountable, offering few negative consequences when an employee falls short of expectations, and gives supervisors unwieldy options for intervening,” the DOD proposal says.”
Callibration meeting Each year, the internal competition culminates at an extended semi-open tournament called an Organization Level Review, where managers debate subordinates’ rankings, assigning and reassigning names to boxes in a matrix projected on the wall. In recent years, other large companies, including Microsoft, General Electric and Accenture Consulting, have dropped the practice — often called stack ranking, or “rank and yank” — in part because it can force managers to get rid of valuable talent just to meet quotas.

Preparing is like getting ready for a court case, many supervisors say: To avoid losing good members of their teams — which could spell doom — they must come armed with paper trails to defend the wrongfully accused and incriminate members of competing groups. Or they adopt a strategy of choosing sacrificial lambs to protect more essential players. “You learn how to diplomatically throw people under the bus,” said a marketer who spent six years in the retail division. “It’s a horrible feeling.”

Unique to Discipline Without Punishment is the final step before an employee’s termination – the Decision Making Leave. The employee is suspended for a day with full pay. On this day he must make a final decision: either solve the problem and commit to fully acceptable performance, or quit and find more satisfying employment somewhere else. Performance Improvement Plan--“confidential” and among other expectations of the PIP is that the responsibility for bringing performance to the acceptable level rests with the targeted employee. “It would allow top officials to suspend an employee without pay. They would have 30 days to prepare a written statement of specific charges, but the employee would have just seven days to respond. That time discrepancy is one example of the plan’s power shift.”

Dick Grote: “Rank and Yank” at Amazon; Firm Unlikely to Break Cycle of Forced Ranking’s Failure

Artist: michael sloan
By Michael Sloan

The staying power of Dick Grote’s forced ranking is confusing considering its record of failure:

  • Enron
  • Federal Reserve Board
  • General Electric
  • Microsoft
  • Yahoo.
Bucket (rank) Percentage (amounts can be adjusted) Effect
A 20 Lavish rewards, encouragement
B 70 Little to paltry increase
C 10 Pressure to quit, firing

According to an article in the August 16, 2015, New York Times, “Amazon’s Bruising, Thrilling Workplace,” Amazon.com (a sales and marketing organization) can be added to the list. A list of 14 leadership principles, which were developed by the chief executive officer (CEO), Jeff Bezos, fuels a demand of perfection of delivering for the customer with high standards of performance (long hours, being subject to withering criticism and backstabbing–in short the worst behavior humanity can deliver short of physical violence).

Furthermore, the expectation of constant availability without compensation is thoroughly abusive. Amazon does not perform its service for customers for free; thus, Amazon should not expect overtime without compensation. The “salaried” designation is being abused, as low salaries are diluted every minute beyond a 40 hour work week.

I have written posts discussing Grote’s “rank and yank” system. I have a table with discussion of the Amazon system.

Dick Grote’s Forced Ranking Amazon.com (text in quotation marks are from the New York Times article)
Anytime Feedback Tool-allows co-workers to send feedback to one’s manager without the targeted employee’s knowledge. Jeff Bezos, chief executive officer of Amazon, is an investor in Workday, which seeks to bring this “gem” to other organizations which purchase it.
Manager sets tough objectives and expects the employee to figure out how to satisfy the manager’s expectations “Molly Jay, an early member of the Kindle team, said she received high ratings for years. But when she began traveling to care for her father, who was suffering from cancer, and cut back working on nights and weekends, her status changed. She was blocked from transferring to a less pressure-filled job, she said, and her boss told her she was “a problem.” As her father was dying, she took unpaid leave to care for him and never returned to Amazon.

“When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.”

Callibration meeting “Each year, the internal competition culminates at an extended semi-open tournament called an Organization Level Review, where managers debate subordinates’ rankings, assigning and reassigning names to boxes in a matrix projected on the wall. In recent years, other large companies, including Microsoft, General Electric and Accenture Consulting, have dropped the practice — often called stack ranking, or “rank and yank” — in part because it can force managers to get rid of valuable talent just to meet quotas.”

“Preparing is like getting ready for a court case, many supervisors say: To avoid losing good members of their teams — which could spell doom — they must come armed with paper trails to defend the wrongfully accused and incriminate members of competing groups. Or they adopt a strategy of choosing sacrificial lambs to protect more essential players. “You learn how to diplomatically throw people under the bus,” said a marketer who spent six years in the retail division. “It’s a horrible feeling.” “

Unique to Discipline Without Punishment is the final step before an employee’s termination – the Decision Making Leave. The employee is suspended for a day with full pay. On this day he must make a final decision: either solve the problem and commit to fully acceptable performance, or quit and find more satisfying employment somewhere else. Performance Improvement Plan--confidential and among other expectations of the PIP is that the responsibility for bringing performance to the acceptable level rests with the targeted employee.

[Author’s Note: There was a statement from a Master of Business Administration degree holder who said that conflict brings about innovation. It depends how you view innovation. Amazon is a sales and marketing firm, and the innovations discussed in the article relate to sales and marketing not new ideas that can move humanity forward. Each has their place, but it serves as a caution before making broad statements without context.]

Futility of “Colorblindness” and Confirmation Bias: Can Poison Workplace Interaction of a Supervisor and Subordinate Employee; These Interactions Must Be Covered under Equal Employment Opportunity Law

In the United States, the manager of an organization is give great power to hire, supervise, instruct, discipline, and terminate employees, according to the laws relating to employment (indexed as master and servant) law.

Perhaps in a sufficient number of cases, manager’s assessment in an applicable discretionary power is correct, but in a situation of implied bias–that the supervisor is prone to disfavor the work of a subordinate just because of his or her skin color, such discretion becomes racially discriminatory and unfair. The subordinate cannot do anything to avoid the effects of a manager who applies a unconscious bias to such subordinate.

As a result, broad assertions (even with manager-supplied documented “proof”) of poor performance, must be viewed with a skeptical eye and with a view of ensuring that the manager’s assessment and documentation is itself fair and equitable to the subordinate and not just accepting the manager’s compilation of errors is the final word. This point is a definite weakness of the Grote forced distribution system (governed by manager’s unchecked “opinion”), covered separately in this blog.

Exploring the issue of unconscious bias, Dr. Arin N. Reeves, a researcher with Nextions, a consulting organization, investigated the effect of confirmation bias. Specifically, Dr. Reeves was investigating the reason from prior research finding that supervising lawyers perceived African American lawyers to be sub par in their writing skills in comparison to their Caucasian counterparts.

Dr. Reeves and her team performed a study, studying the issue from a perspective of unconscious or implicit bias. Five law partners were asked to write an legal research memo from a hypothetical third-year litigation associate that focused on trade secrets in Internet start-ups. The researchers then introduced 22 errors–spelling and grammar (7), substantive technical writing errors (6), errors of fact (5), and errors of analysis (4).

This error-amended memo was provided to 60 partners of law firms; one-half of them were told that the memo was written by an African American associate, and the other one-half of them were told that the author was Caucasian.

The result–from 53 law partners (24 having reviewed the African American associate’s memo and 29 having reviewed the Caucasian associates memo)–is as follows:

African American Associate Caucasian Associate
Overall quality of the memo (rated from 1 (poor) to 5 (extremely well written) 3.2/5.0 4.1/5.0
Qualitative comments
  • “needs lots of work”,
  • “can’t believe he went to NYU”,
  • average at best”
  • “generally good writer but needs to work on…”,
  • “has potential”,
  • “good analytical skills”
Specific errors
Spelling and grammar errors found 5.8/7.0 2.9/7.0
Technical writing errors 4.9/6.0 4.1/6.0
Errors in fact 3.9/5.0 3.2/5.0
Errors in analysis Rated better overall because he had fewer critical comments.
Formatting (not requested by research group, but 41 comments received) 29 comments / 41 11 comments / 41

The researchers noted that there was no significant correlation between a partners race/ethnicity and the differentiated patters of errors found between the two memos. In addition, there was no significant correlation between a partner’s gender and the differentiated patterns of errors found between the two memos, the researchers continued. The researchers stated that they did find that female partners generally found more errors and wrote longer narratives than the male partners.

Dick Grote, Forced Distribution, and the EEOC Compliance Manual: Forced Distribution Must Show Compliance with All Civil Rights Laws and Regulations

Forced Ranking, its main apologist is Dick Grote, is a blunt management tool, one that does not work in an imperfect world. When imperfect human beings, named as managers, deign themselves to be perfect judges of “performance” by virtue of their position and power over other human beings, the result must be tragedy. See, for example, the Vanity Fair article on Microsoft or read the many articles on the failures of Enron.

This tragedy is compounded with one of the United States of America’s great shames and weaknesses–chattel slavery of African Americans and all of the negative results visited on those human beings considered as mere property and their descendants. The United States has barely started the recovery process on this indelible stain on the society and its governmental institutions, yet careful and conscientious observers witness consistent backsliding on true equal opportunity. Such weakness is magnified greatly with reckless use of forced distribution, with all of the negatives of the terrible procedure, such as

  • being emotionally abused through unchecked abuse of power,
  • finding new paying work,
  • having to explain the firing in neutral terms repeatedly in interviews with potential employers, and
  • losing access to money to pay for life’s necessities (food, shelter, and clothing) for oneself and his or her family.

All of the bulleted items (above) are thrown onto the target (the so-called poor performer, c-bucket employee) who does not know of the extent of the management’s wicked actions in “calibration” meetings.

Grote, in his writings (analyzed on this blog) on forced distribution, never directly considers the Equal Employment Opportunity Commission’s Compliance Manual and its effect on the use of forced distribution in the workplace. Obliquely, there is one example, that I contrast with an example from the EEOC’s Compliance Manual (below). Employers must be aware, however, that all aspects of processes affecting employees must be without bias.

Dick Grote Quote Equal Employment Opportunity Compliance Manual
“But what if a company’s forced ranking procedure, honestly and objectively done, reveals that the blacks or women or disabled employees just aren’t as talented as the white ones? Should they do what some Harvard professors are said to do and award A’s to all the blacks, just to keep them from squawking?” (Grote, page 4 (a quote from a previous post)).

(Note: Consider this statement from Grote with the ever-present and persistent legacy of slavery and Jim Crow subjugation in the United States of America.)

2. Performance Evaluations

Performance evaluations frequently serve as the basis for numerous other employment decisions, such as pay, promotions, and terminations. They should be unaffected by race bias.

EXAMPLE 23 PERFORMANCE EVALUATIONS

Daniel is a customer service representative, and the only African American in his unit. Until recently he has received uniformly stellar performance ratings, received performance awards, and earned a good reputation among his customers and colleagues.

Things began to change, however, when a new supervisor was assigned a year ago to manage his unit. While Daniel had long been rated one of the best employees, the new supervisor began rating Daniel as below average, which has affected Daniel’s quarterly bonuses.

He files a charge alleging race discrimination. A review of the performance evaluations of Daniel and others in his unit reveals that while Daniel’s overall performance rating has dropped markedly, the ratings of his counterparts have gone up. Significantly, on the most objective part of his performance evaluation – “quantity of results,” which measures the number of accounts serviced – Daniel was rated below average when in actuality he serviced more accounts than persons with higher ratings in this performance category. In addition, there is evidence that the supervisor undermined Daniel’s professional standing with customers – for example, by taking over meetings Daniel was supposed to lead, and refusing to correct a customer’s clearly mistaken belief that Daniel was responsible for an error. This treatment is markedly different than that of Daniel’s colleagues.

The investigation reveals no evidence of a nondiscriminatory reason – such as a pure personality clash (i.e., one not rooted in the alleged bias)(147) – that explains Daniel’s treatment. There is reasonable cause to believe Daniel’s performance evaluations, and thus his pay, were racially discriminatory.(148)

Federal Reserve Board (OIG Report 2015-MO-B-006): Number of Black Employees in All Other Pay Grades Fell during Period of 2011 to 2013; Reason for the Decline is Unclear

This post contains an additional observation of the audit report of the Office of the Inspector General (OIG) for the Federal Reserve Board, 2015-MO-B-006. (Previous posts on the OIG report are located elsewhere on the blog.)

In Table C-2 of the OIG report (page 65), despite the total number of employees increasing at the Board during the 2011-2013 period, the Black employees in the All Other pay grade category fell 34 positions total during the same period. The reason for the decline is also unclear, but it is a result that requires a full explanation.

There were small increases in the higher pay grades for Black employees. It is unclear whether the increase came from promotions or external hiring. It is interesting to note that the Blacks, All Others category (2012 and 2013), lost 18 positions, but the gain in the mid-level (11) and senior managers (7) totaled 18. This result left the total number of Black employees the same.

Since all job classes are combined, it is unclear what job classes were affected.

Black/African American Permanent Board Employees, Table C-2, 2011-2013
2011 2012 2013
Total Black/African American employees 567 573 573
All other pay grades, FR-16 to FR-25 434 418 400
Mid-level professional pay grades, FR-26 to FR-28 106 125 136
Senior managers and officers pay grade, FR-29 to FR-00 27 30 37
Total employees of the Federal Reserve Board 2187 2279 2353
Source: FRB OIG Audit Report 2015-MO-B-006, page 65.