grade.(forced ranking strategies and techniques, includes discussion of Siebel Systems personnel management strategies)

As the practice of forced ranking comes under the spotlight, Keith Rodgers finds that it needs to be used with other measurement tools to be truly effective

If you're in the bottom 5 per cent of performers at Siebel Systems, the Silicon Valley-based computer software company, you'd do well to start refreshing your resum?. Every six months, using data aggregated from an ongoing performance appraisal process, the company culls its lowest-ranking employees. Taking its lead from a process evangelised by Jack Welch, the former head of GE, Siebel effectively forces its managers to face up to tough questions: which employees really add value to the organisation, and which are a drain?

This process of 'forced ranking', adopted by a number of US companies, has come under the spotlight over the last year as the economic downturn forced companies to pay closer attention to their bottom-line costs. Criticised in some quarters for taking a mathematical approach to a complex human issue, in many companies ranking is evolving into a highly sophisticated measurement activity, supported by a growing array of software tools and business processes. More importantly, however, it's now being viewed not as a standalone activity that can make or break individual careers, but as one part of an extensive HR portfolio that incorporates techniques such as competency profiling and e-learning. Carried out as an isolated management activity, forced ranking is only as good as the metrics and management disciplines that underpin it: used in association with other business measurement and workforce improvement tools, however, it offers organisations the chance to really leverage their human capital assets.

At a basic level, the processes behind forced ranking are deceptively simple. Each employee is set objectives against a specific timeframe: at the end of the period, they're judged on a scale of one to five (or 'a' to 'e') as to how effectively they hit their targets. That ranking is used in both formal appraisal…