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Kate Phelon

Sift Media

Content manager

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Stack ranking works


Businesses face many scenarios where optimizing their workforce is critical to success – realigning and restructuring employees, building their strengths to take on the competition, and of course responding to changes in the business environment. Today corporate profits are shrinking, and uncertain economic conditions look as though they will continue for some time. This has many organisations asking, how can we optimize our workforce? How can we emerge from this crisis strong and able to compete?

Stack ranking is one method companies have long used to manage their people and identify employees to manage out or up – GE for example categorizes their workers as being top, middle and low performers with a 20% high, 70% middle, and 10% low performer distribution. They regularly manage out the bottom 10%. Stack ranking is a powerful tool, but does it work?

Professor of management at Drake University in Iowa, Steve Scullen, found that forced ranking, including the firing of the bottom 5% or 10%, results in an impressive 16% productivity improvement.

Companies that are able to quickly compare the performance of their people to find high and low performers have an advantage over those who cannot. Low performers actually cost the company money, so when a business manages them out they see an immediate benefit. The opportunity cost is even higher. If high performers contribute about five times as much as low performers, as our friend and thought leader Dr. Peter Cappelli has found in his research, the opportunity costs is huge. Imagine how much more value the company could generate if they could replace low performers with high performers.

SuccessFactors decided to tailor a solution for optimizing the workforce by building a tool that allows managers to stack rank their employees. Of course stack ranking isn’t just about managing out low performers, but it is also about ensuring that you are able to find and cultivate your best talent. Those top performers who contribute five times as much as the low performers should be rewarded, leaders should be identified and trained. Competencies should be compared and managed across teams to ensure that the right capabilities are in place. Stack ranking is a great tool not only for optimizing your workforce, but also for building it.

Already rich with performance management data, the SuccessFactors Stack Ranker helps managers to:

  • Visually rank talent – instantly identify your top-ranked players so that you can optimize your team by motivating and cultivating your best people. Give limited rewards to top employees that deserve extra recognition, or quickly identify low performers to let go when faced with tough lay-off decisions.

  • Go beyond performance reviews – Stack Ranker expands the formal review process by letting you capture new characteristics for a more holistic assessment. For example, you can incorporate factors like criticality of the role into ranking or other criteria to serve as tiebreakers.

  • Assess everyone at once – quickly assess your entire team across critical competencies and criteria in real time — all in one place. Side-by-side rating promotes more accurate relative assessments.

Stack Ranker was designed to help companies act now. Organisations simply cannot afford to carry the dead weight of low performers in these uncertain times. Furthermore, they need to move quickly or their competitors will outflank them. Tools like Stack Ranker are critical to succeeding in today’s environment and building a strong, winning workforce.

Chris Lozaga, research analyst, SuccessFactors Research

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Kate Phelon

Content manager

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