A New Hope for Rank and Yank

 “A New Hope for Rank and Yank” was published by Jamie R. Mulligan, Illinois State University, and Rebecca A. Bull Schaefer, Gonzaga University, in the Journal of Leadership & Organizational Studies. Dr. Mulligan and Dr. Bull Schaefer kindly provided the following thoughts on their article.

Our Research Problem

Through the application of research and theory related to due process and justice, we sought to answer practitioner and research questions regarding the strategic usefulness of using forced distribution rating systems (FDRS). Our work was an extension of a recent simulation study in Personnel Psychology by Scullen, Bergby, and Aiman-Smith (2005), which raised questions about the long-term effectiveness of FDRS.

Specifically, we explored how an FDRS, affectionately called Rank and Yank, could be implemented not only to increase performance appraisal influence on long-term organizational performance, but also to reduce voluntary turnover intentions. The following four variations of FDRS were considered in our study:

1. Traditional/Strict Rank and Yank: The bottom 10% of employees in each department were terminated and replaced each year.

2. Temporary use of Strict Rank and Yank: A traditional/strict system was used for 3 years, with no systematic termination thereafter.

3. Probationary Rank and Yank: The first time that employees were ranked in the bottom 10% of their respective departments, they received warnings. However, if these employees were once again ranked in the bottom 10% of their departments at any future point, they were terminated and replaced.

4. We also consider a system with no systematic termination.

Who is the target audience for this article? What Inspired You To Be Interested In This Topic? How Does This Study Fit Into Your Body Of Work/Line Of Research?

This article was a balance between research and practice. Our motivation for writing this article was two-fold. First, both of us were familiar with the simulation study conducted by Scullen, Bergby, and Aiman-Smith (2005), and their results, which indicated that (at least in theory) a traditional/strict rank and yank FDRS can yield significant gains in the potential performance of an organization’s workforce. However, many organizations don’t follow a traditional/or strict rank and yank system in practice. They tend to implement modified versions of the traditional rank and yank system. We therefore sought to extend the original simulation study in a manner that would yield more practical insight.

We also took the first step at exploring some of the potential negative impact on morale that rank and yank systems pose, by investigating how modified rank and yank systems are likely to impact voluntary turnover rates, as established by existing literature on due process and justice theories.

The second motivation for writing this article was very utilitarian. Collaboratively, we had the background and skill-set necessary to complete a management simulation study. One of us had research experience in HR-related policies and how those reactions can translate into the home domain and/or into future career decisions, the other had experience in the design and analysis of simulation experiments.

Conclusions

Consistent with the findings of Scullen et al. (2005), we found that using an FDRS system with termination as a consequence has a powerful influence on an organization’s performance potential. We also found that probationary systems with lower associated voluntary turnover rates may offer organizations an effective alternative to strict rank and yank with higher associated voluntary turnover rates. These results favoring probationary periods are promising because it could be a way for organizations to realize some of the gains in performance that a traditional FDRS poses, while considering employee reactions.

Were there findings that were surprising to you? How do you see this study influencing future practice?

One finding that was surprising was that temporary use of a rank yank system does not provide sustainable, long-term yields in the potential performance of an organization’s workforce. More explicitly, once an organization ceases use of the rank and yank system, potential performance immediately begins to decline. This was particularly surprising because there are several indications that temporary use of a rank and yank system has been advised by management consultants. Due to such advice, organizations may be tempted to only use rank and yank approaches every now and again, but leaders should take notice to the results of only using rank and yank temporarily (for a few years) and administer caution when considering such a strategy. Although organizational performance increases quickly during those years, it begins regressing back towards base-line performance after dismissing a rank and yank system, and, therefore, the benefits achieved are eventually lost.

How do you see this study influencing future research?

Future research should explore who is likely to leave due to the use of a rank and yank system. If organizations are losing poorer performing employees, they may appreciate the higher voluntary turnover rate to further minimize the ‘deadwood’. An investigation into other predictors of voluntary turnover was beyond the scope of our study, and future research needs to examine if perceptions of justice trump other motivational forces with regard to employee turnover intentions.

Relative to other social studies, simulation studies are lacking in organization and management research, (Harrison, Lin, Carroll, and Carley, 2007). This article demonstrates that despite simplifying assumptions, simulation models can yield insights that help both researchers and practitioners better understand complex system dynamics.

What, if anything, would you do differently if you could go back and do this study again?

One advantage of a simulation study is that the model often ‘evolves’ with the researcher’s understanding of the process. Hence, we were able to investigate several preliminary models during the course of research before deciding on the final version of the model as presented in our paper.

References

R. Harrison, R., Lin, Z., Carroll, G. & Carley, K. (2007). Simulation modeling in organizational and management research. Academy of Management Review, 32(4), 1229-1245.

Scullen, S. E., Bergey, P. K., & Aiman-Smith, L. (2005). Forced distribution rating systems and the improvement of workforce potential: A baseline simulation. Personnel Psychology, 59, 1-32.