First, lets note that Jack Welch was downsizing GE when he began using the concept. The idea of determining who were the lower 10% performing employees is a means of determining who should be let go VS who should be kept for a company trying to lower costs in a downturn. But the wholesale use of it by companies today is based on the mis-understanding that to be successful “you must use” this concept. The reason is, as a company expands, Rank and Yank forces people out. Thus a company trying to capitalize on a new product is hamstrung by a lack of personnel to bring it to market, or expand production.
Rank and Yank’s policy of constantly removing the lower 10% only works for a company that is expanding if you have a huge pool of new employees to fill the void. This void being the number of new people needed to replace the removed 10%, plus the extra people needed to meet the needs of the expansion. As has been noted for the last few years, tech firms are struggling to find engineers and programmers. Thus we constantly hear of the need to bring in foreign workers with H-1B visas. But as even the foreign worker pool has shrunk, the forced reductions in employees required by Rank and Yank continue. Thus, the concept has become counter productive.
In regards to those employees removed by Rank and Yank, more then likely new employers look at them as a liability not a potential value. Once you have been “Yanked” you are viewed as a sub performer and thus only fit to go into a new profession. Thus why new college hires with no experience, or foreign workers with dubious credentials, get more favored treatment by hiring managers. The end result being this wonderful shortage of tech personnel constantly talked about, even as the number of early-retired engineers continues to grow.
When Rank and Yank begins, yes it can be a good way to clean out some dead wood in various groups within a company. But continuous use of it and its required removal of the lower 10% eventually means the removal of people who were doing well a few years before: their performance hasn’t changed, they were just now the lowest person on the totem pole. That being said, once they are removed they are then viewed as an under performer by HR managers and thus politely rejected for open positions in favor of the new college hire and foreign workers with no history. The rise of the pre-employment tests, now given to determine the potential future performance of new hires, mirrors the Rank and Yank system within the companies and serves only to insure that there are no “Qualified Applicants” for the positions.
Given how long this has been going on its not surprising that companies like Microsoft and now Jeff Bezos’s Amazon are trying to change (key word- Trying). The recession of 2008 masked the negative features of the system as companies downsized. But the economic growth of the last four years has been notably slow, all reported to be due to a lack of trained people. Since Rank and Yank requires reduction, it insures the companies cannot grow. And its obvious, once the system starts it seems impossible to shutdown.