John Welsh, a former CEO of GE, created the method of “forced ranking” in an annual review that is still sometimes used today. This puts people into 3 performance buckets: A, superstars, B, average, and C, underperformers. While this system allowed for seemingly objective reviews and rewards, it created many problems as time went on. It forced toxic competition, and as goals became shorter term, the annual review “ranking” became irrelevant, as it was too focused on the past. Now, GE, the creator of these forced rankings, has acknowledged that system is no longer working and implemented a system like performance momentum, rolled out in 2016.
