Forced ranking is a workforce management tool based on the premise that in order to develop and thrive, a company must identify its best and worst performers, then nurture the former and rehabilitate and/or discard the latter. It is a subject that makes many managers cringe.

Dick Grote is one of the country's foremost advocates of the system. He feels it creates and sustains a high-performance, high-talent culture. Byron Woollen's philosophy is diametrically opposed to Grote's. He advises companies on how to avoid or extricate themselves from this evaluation process, particularly in light of recent lawsuits that targeted forced ranking as discriminatory.

A forced ranking grading system uses rigorous evaluation and routing of employees by their immediate supervisors on agreed-upon abilities, skills, and attitudes. Everybody from the top down is placed on a bell-shaped, company-wide curve, or in one of four quartered-square "quartiles," or "buckets." Other companies use a 1-to-5 ranking scale. Employees who finish in, say, the first 15 percent of the curve or the top left quartile or are rated as 5 are marked as A players, and given raises, stock options and training. In contrast, those in the bottom right hand square, the bottom ten percent, or rated as 1 are given no raises and either given training or fired. Thus the moniker "Rank and Yank."

These rankings come during intense yearly performance reviews, during which managers must place each of their underlings in their proper place.

At the heart of the system is the belief that the ranking will result in a bell-shaped curve. Experts disagree about whether this is practical or possible.

In order to rate workers honestly, managers need an objective set of criteria. Forced rankings usually leave out "softer" qualities that some consider essential, like teamwork, honesty, dedication and cheerfulness. In order to be as objective as possible, the decision should never be left to one person, since different people see different things.

Forced ranking can be hard on the workforce morale, both for the managers who are forced to make tough decisions, and the employees who are being ranked. Managers tend to protect and advance their own people, so politics can effect rankings. After a couple years of weeding out the worst employees, the system begins to create a competitive situation whereby employees begin to cannibalize each other. Grote recommends that a company should stop the ranking after 3 years, and start it up again 3-4 years later after new people have been brought into the company.

An alleged bias against women, minorities, and older workers is the most contentious argument against forced ranking. It has also been the subject of several lawsuits resulting in the companies dropping the practice. This tends to happen when companies use vague criteria, such as "fits in with others" in their performance reviews. Proponents of the system, however, defend forced ranking as a means of forcing managers to have the tough conversations with employees with poor performance.