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RANK ‘EM AND YANK ‘EM

Case Study No. 8

Human Resource Management

Presented to

LTC Rachelle G. Franco, AFP(Res)PD-SML, Ph.D.BM,MBA,LPT,FRIBA

Faculty of Graduate School of Business Management
PHILIPPINE CHRISTIAN UNIVERSITY
MANILA

In Partial Fulfilment
of the Requirement for the Degree

MBA

REX ANTONINO P. AGAAB

MARCH 31, 2023
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I. The Case

Imagine you are the VP of human resources for a

fortune 100 company. You have spent your entire career

attempting to enhance the workplace for employees to

support their productive work in the organization.

While you understand that bottom-line decisions often

dominate many of the matters you have to address,

you’ve worked hard to ensure that employees were

treated with respect and dignity in all interactions

that affected them. You aligned the hiring process to

serve the strategic needs of the organization, as well

as implemented an effective performance management

system. You truly believe in the progress you’ve made

in helping the organization achieve its goals. You

simply couldn’t imagine doing things differently.

However, concern that the performance management

process is becoming less effective because managers

are inflating employee ratings has led 15 percent of

all large organizations to adjust their performance

management process to what is frequently called “rank

and yank”.
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Under such a system, managers are evaluated as a

1, 2, 3, or 4, with 1 being the highest rating and 4

the lowest. In many cases, managers are required to

give a 4 rating to the lowest 10 percent of employees

each year. Those individuals receiving a rating of 4

for two consecutive years are often let go from the

organization. The intent behind this system is that

throughout the two-year process, evaluators are to

meet frequently with the four employees, counsel them,

and provide necessary development opportunities.

Employees in organizations that employ such a

performance management system often view this process

unbearable. They view the performance management

process as punitive, one in which the organization is

attempting to rid itself of higher-paid older workers.

In at least one case, Ford Motor Company employees

have filed a lawsuit to stop this practice and

prevailed. Ford removed the punitive nature of its

evaluation system- and focused it more on counseling

and performance improvement of the lowest-rated

employees rather than elimination from the

organization.
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What long-term effect does a performance

management system that focuses on rank and yank have

on the organization? Only time will tell.

II. Questions:

1. What type of evaluation process would you say

is being used in this case? Describe the

elements to support your position.

To me, this is an example of employee

elimination process where in those employees

with the lowest ratings are being eliminated.

This is punitive in nature and in my opinion

violative to our labor laws.

2. What effect, if any, do you believe rank and

yank evaluation systems have on managers? Do

you see these effects as positive or negative?

Defend your position.

I believe, the effect of this evaluation system

to managers would give them feeling of guilt

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and worry as they are required to fire 10% of

the employees each year.

This will definitely give a negative impact.

The whole premise of the practice of ranking

employees and firing the lowest performers is

flawed. It assumes that a certain number of

employees aren't making the cut, but that may

not be the case.

With a rank-and-yank system, you may be firing

perfectly good workers because someone has to

end up at the bottom. Their work may be

completely acceptable, and even above average,

but they are fired because others rank above

them. It tells workers that no matter how hard

they work, they could still be let go because

everyone else did better than them.

3. What role does such a system have in distorting

performance appraisals?
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Rank and yank assumes an employee’s

underperformance is their fault. In reality, it

could be a lack of training that’s causing poor

performance. Their performance could be blamed

on a bad manager who struggles to outline

expectations with their team. A lack of

resources can cause underperformance. It’s

unfair to let an employee go when it’s the

company and its operations that need to make

adjustments.