Ranking and rating often come into play during downsizing programs. For many companies, it’s the first time that they’ve used these tools. As a rule, they’ve done a poor job of developing benchmarks and they often act in a rushed, subjective, or ad hoc basis. For example, if you tried to identify the top five performers in your department (or the five most dispensable), without data to back up these assessments, you’re leaving yourself wide open to accusations of discrimination based on age, race, gender, or other criteria. That’s why it’s a good idea for employers to consult with legal and personnel experts during the downsizing process.

Once you have your rankings, focus on nurturing the top 20% of performers. Your company wouldn’t be around without them, so give them the support that they deserve. However, make sure that their performance is a balanced one. If their success is due to a 60, 70, or 80-hour workweek, it’s simply not sustainable. Under most circumstances, employees should get their jobs done in 40 hours, and managers within 50. Anything beyond that can destroy a culture, career, and company.

Put the bottom 20% of employees on a performance plan that’s so well designed that if they don’t live up to it, in a sense, they fire themselves.

Find out what’s going on when people move up or down in the rankings. What’s the reason for their sudden success or failure? How can you reward success and turn around failure?

There’s no good reason to avoid rating and ranking your employees. It’s your responsibility as a manager to put people in a position that gives them the opportunity to succeed. Get them involved in defining the process — and you’ll find that ranking and rating can work for your business.

GE super executive Jack Welch was a firm believer in ranking employees and annually eliminating the bottom 10%. We agree with Welch that there should be no hiding from performance. Ranking and rating workers makes sense, provided that you meet these conditions:

1. Get the data needed to identify good performance. This is easy in sales, but more difficult in administration.
2. Make the data available in a format that allows managers to understand and use it.
3. Have a dialogue with employees, setting forth expected performance benchmarks. Ask yourself, “How would an employee know if they were doing well or poorly without having to ask me or without my having to tell them?” If they can answer that question, you’ve defined your performance benchmarks clearly.
4. Prepare draft guidelines for ranking and rating and then hold a townhouse meeting where employees can express their concerns about it. Consider answering some of their fears in advance with Frequently Asked Questions (FAQs) that might answer such inquiries as:
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     • How does our performance affect the ranking?
     • How do we know if the rankings are accurate?
     • What do the rankings mean for our pay?
     • What if we disagree with a ranking?
     • What if we feel that our contributions to the company aren’t presented accurately in the ranking guidelines?
     • What will you do with good performers — and poor ones?
     • Who gets to see the list? The answer should be only those in the company with a need to know. It might not be a good idea to share the rankings and ratings from different departments; the more open your environment, the more sharing that can go on.

Acknowledge that there will be some fears on all sides. Identify and address them up front. If you’re acting with integrity, the only fear that should remain is that of non-performance.