Small Business Glossary and Definitions

A Forced Ranking Performance Evaluation is an employee performance review method that ranks employee performance against other employees’ performance instead of against a standard set of goals and criteria. Employees are typically ranked in categories or “baskets”—for example, top 20%, middle 60%, bottom 20%--and rewarded accordingly.

Proponents of forced rankings contend that the process identifies and rewards top performers while targeting underperforming employees who might need additional training or even firing. Detractors contend that the process encourages individual performance at the expense of team-building and can unfairly penalize good workers who happen to fall on the wrong part of a statistical curve.

Many companies utilize a forced ranking performance evaluation as one part of a wider evaluation process that can include traditional performance evaluation methods. Comparing the results of the various methods often provide interesting insights into employee performance and management evaluation.