What is forced distribution? Definition and examples
Forced Distribution is a method of employee performance appraisal that many companies use. We also call it the Forced Distribution Method, Stacked Ranking, or Bell-Curve Rating. It is a rating system that employers use to evaluate their workers. Managers must evaluate each employee, usually into one of three categories, i.e., poor, good, or excellent. There may be more categories.
Although forced distribution is extremely popular among companies, it is somewhat controversial among HR experts. HR stands for Human Resources.
Opponents say it can create undesirable competition or unhealthy rivalry among employees. It can also trigger resentment and low morale.
Additionally, critics say that it is not possible to categorize some employees within one of the three categories. They say that the category of some workers do not reflect their true performance.
Force distribution – General Electric
American multinational corporation, General Electric, adopted the forced distribution method in the 1980s. It was one of the first companies to adopt it.
Jack Welch, who was Chairman and CEO of General Electric at the time, wanted to reduce the company’s workforce. In fact, he regularly cut down employee numbers by firing ‘poor’ performers.
The website mbaskool.com says the following regarding the Method:
“The forced distribution method is one of the most widely used and also the most criticized method of performance appraisal.”
“This is a rating system that is used all over the world by companies to evaluate their workforce.”
Forced distribution – pros and cons
Like all systems that companies use, this method has its pros and cons.
In a Forbes article, Victor Lipman says he can see some benefits to forced ranking. However, overall he concludes that the harms, i.e., managerial problems the method causes, are greater than the benefits.
Lipman had been a manager at MassMutual Financial Group, a Fortune 500 company.
It can boost productivity. If all workers fear slipping to a ‘poor’ ranking, they will work harder to remain as ‘good’ and ‘excellent’ performers.
General Electric said that the system helped boost its earnings between 1981 and 2001 by 2800%.
Among companies that adopt the method, managers have hard conversations with employees. These are conversations they might not otherwise have had.
According to Lipman:
“There’s no question in my mind forced ranking does bring disciplined rigor to the management process.”
“As any manager knows, it’s often easier to avoid difficult, painful performance-related conversations than to confront them head on.”
Forced distribution also makes it easier or possible to identify the best employees.
Forced distribution often causes worker morale problems. Many employees who find themselves with a middle ranking, feel that they should be higher up.
Hard working employees especially resent not being in the top categories.
The system can also lead to declining talent in the company. By having too many top-ranked workers in a company, it subsequently becomes difficult to maintain a top rating.
Moreover, this method may inadvertently shape a company’s culture to prioritize competition over collaboration, affecting teamwork and cohesiveness.
Therefore, people hire personnel with a lower ranking. This means taking on employees who are less productive so that they can retain their high ranking.
There is also a greater risk of burnout. In an article on the Career Addict website, Andy Peloquin writes:
“No one can work at 100% output 100% of the time; it’s just not humanly possible! The Forced Ranking system uses fear as a motivator, which increases the amount of stress placed on employees.”
“This, in turn, increases the risk of burnout.”
Video – What is Forced Distribution?
This video, from our YouTube partner channel – Marketing Business Network, explains what ‘Forced Distribution’ means using simple and easy-to-understand language and examples.