Forced ranking is a procedure that requires managers to assign employees into predetermined

groups according to their performance, potential, and promotability..

The best know company following this procedure is General Electric.

They sort the employees into three groups.: a top 20% on whom rewards ,promotions and stock
options are showered; a high performing middle 70% with good futures; and a bottom 10%. The
bottom 10% is unlikely to stay.

Some other Companies:

Microsoft, Cisco Systems,HP,EDS,Pepsi Co and Sun Microsystems.

What all these systems have in common is the requiremnt of comparison of people in addition to
conventional performance appraisal..

Managers must place each person into one of a limited number of categories with a fixed
percentage assigned to each one.

In India the pioneers to introduce was Murugappa Group in late 1980s.

If you understand this, your doubt on Bell Curve will get answered. To make it more clear, after the
performance appraisal, the numbers should fall in a bell curve...top 20%at one end, 70% in the
middle and bottom 10% at the other end of the curve and the curve will look like a Bell.

It is incorrect to say that any adjustment is made. Actually no adjustment is made. Manager may rate
all his employees say in category A to please all. How do we correct this. The principle to correct this
derived from the concept of Forced Ranking based on well known statistical maxim....Uniform
Distribution. or Normal Distribution.

I hope I make some sense. I have been part of Murugappa Group and that is where I learned this. I
also tried to implement in one or two companies but not with much success .The failure was
basically due to very small numbers I was having in different companies. This works well when you
have large number of employees to be rated. In small numbers, say for 50 to 100 or even 200, this
may not work perfect as you may not get a perfect bell curve.
Bell curve is used for performance management. This theory was conceived by Hernstein & Murray
in 1994.

If you have 100 employees in a group / tea / project, you rate everybody and colect their self
appraisal rating. When you compare you usually come out with a graph, where you have ratings or
scores on one hand and number of employees on the other hand.

The logic is, as per the bell-curve rule, you got to classify certain number of emplyees forcefully
under some defined rules.

This is forced distribution, and that is one of the drawback of this theory because you are forcefully
by classifying an employee as outstanding or unsatifactory, underestimating his potential, usually
this kind of model is nowadays used in companies which are into restructuring, business process
reengineering, and into cutting down their workforce for cost advantages etc.

Because by inducing this model you can term somebody unsatisfactory compared to someone who
may not be outstanding but comparitively is outstanding..... the good part is... if it is applied properly
and aligned with good practices like competency development and talent management, it can be
used evry effectively, but seldom practitioners end up doing so..