December 12, 2008

Do you get mad seeing some of your people in your organization failing to meet their commitments almost all the times? Do you feel there are too many people in your organization who have hardly anything to show up on their performance? Do you and your team feel getting bogged down by incompetence of a few people? Do you have too many 'easy going and carefree chaps' working in your organization? If 'yes' is the answers to these questions, it is high time your organization pursues "Forced Distribution Rating System" to build a high potential workforce and weed out people who can't deliver.

To put it in simple language, a great organization cannot be built by an army of mediocre. Great organizations are a result of great people. The easiest and the surest way for an organization to become great is to enhance the overall quality of its people by continuously increasing the benchmark of performance and removing people out of the system who fall below the benchmark. One way to practice this is to adopt the formula made famous by legendary Jack Welch to fire bottom 10% of people every year on the basis of their performance.

It may sound harsh, but it is an absolute business necessity if an organization wants to become great. Any organization building exercise is people dependent. If you keep on enhancing the overall quality of the manpower, organization is bound to scale new heights.

Of course the system is not flawless. By practising this model, an organization may lose a few good people and sometimes judgment may go wrong. But in the long run, the model works wonders to develop a superior quality of manpower by constantly raising the bar of performance. It also forces the managers to differentiate talent and get emotionally detached from their people when reviewing their performance. As a result, absolute meritocracy prevails.

But there are a few words of caution. Perfunctory approach to this system may do more harm than good. For making this system work, an organization first needs to work on the following:
  1. Developing an objective system of performance measurement. Subjective judgment must be minimized.
  2. Open and transparent performance measurement system. There is no place for ambiguity. Everything must be open for questioning so that people don't question the fairness of the system.
  3. The process should encourage debate so that chances of misjudgment is minimized. The decision to categorize someone in bottom 10% should not be a cold call but a call based on objective judgment and rigorous debate on the various performance parameters.
If the system is adopted in full seriousness and applies to everyone from CEO to the shop-floor worker, it is bound to change the fortunes of the organization by making it a performance centric and people driven organization.