The Ethics of Forced Ranking

Many of the people who spend their time thinking about business ethics for a living devote a large chunk to thinking about forced ranking. They have to. What businesspeople call forced ranking is known as “grading on the curve” in academia—and professors and students grapple with that slippery statistical slope every day.

“Grading on a strict bell curve means that if you give someone an A, you have to give someone else an F,” says W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Massachusetts. “But perhaps—and maybe a lot more than perhaps—the people at the low end of the bell curve don’t deserve to flunk or be kicked out of school. Or in the case of a corporation, fired.”

Hoffman personally finds grading on the curve (and its corporate sibling, forced ranking) distasteful, but not unethical. It’s distasteful, he says, because it doesn’t recognize students who aren’t good test-takers (or employees who lack champions upstairs at evaluation time) but who demonstrate unquantifiable qualities like loyalty, dependability, determination and persistence. It’s not quite unethical, he says, because it’s often unavoidable. In the classroom, as in the workplace, a laissez-faire attitude toward grading may lead to grade inflation, the Lake Wobegon Effect, where just about everybody is judged to be above average. And that makes the grades meaningless to students, teachers and prospective employers alike.

Hoffman adds that forced ranking remains ethical “as long as there are certain transparent and clearly communicated criteria that employees are aware of when they take and while they’re working on the job. If employees take the job knowing there are going to be bell-curve criteria based on pre-announced testing and evaluation, then they could say at the get-go, ‘I don’t want this job.’ ” But if an employer—as employers are wont to do—announces that it’s going to rev up the workplace by suddenly ringing in the bell curve, “then I would have some concerns.”

So would John Wilcox, director of the Center for Professional Ethics at Manhattan College in New York City. His main worry is how the individual employee is evaluated. “A lot depends on how fairly the system is developed. And how fair the people are who carry it out,” he says. “Who has input into the evaluation? Is it used for political purposes? Does the person at the bottom have a chance to appeal his evaluation? Do people in the organization see it as a positive dimension of the culture? Or as a way to get rid of people that the CEO doesn’t like?”

Thomas White, director of the Center for Ethics and Business at Loyola Marymount University in Los Angeles, takes this a wobbly step further. Regardless of any evaluation system, he says, most non-unionized private-sector employees can be fired “at will” anyway. “When you come down to it, most people wouldn’t agree to at-risk employment unless they had to. Would many people sign a contract that said, ‘We reserve the right to let you go for a good reason or a bad reason. We don’t have to give you an explanation.’ I don’t think so. But what if the contract said: ‘If I’m not doing my job properly, I can be fired.’ They’d sign that.” On another sticky point, White considers the guarantees of “freedom” to an employee to leave his employer and look for a more ethical workplace a bit hollow and hypocritical in these hard times.

Then there are the absolutists. On one hand, “I personally think it’s horrible,” says Robert Shoemake, director of programs and membership at the Center for Ethical Business Cultures in Minneapolis, of forced ranking. “If you don’t give people what they need to perform well and expect them to succeed, if you set a measure to which people should perform and don’t give them the tools to do it, then it’s abusive and unethical.”

On the other hand, James W. Fowler, director of the Center for Ethics at Emory University in Atlanta, says, “If the evaluations are carried out in fair ways, and if people know the grounds or expectations on which they are being evaluated, it could be a reasonable way to reward growth and ability and to cull unpromising or underperforming employees.”

Michael Josephson, founder and president of the nonprofit Joseph & Edna Josephson Institute of Ethics in Los Angeles, won’t declare forced ranking either ethical or unethical. “My instinct is that it’s probably more bad than good,” he says. “My instinct is that it hurts morale, pits employees against each other when you’re trying to create teamwork. The justifications are theoretical. What we really ought to have is pressure on managers to make honest performance evaluations.”

Workforce, July 2003, p. 49 — Subscribe Now!