Thursday, July 30, 2009

What is "Rank or Yank" management?

"Rank or yank" refers to a style of management that you won't find in Tom Peters, "In Search of Excellence". That's okay, "In Search of Excellence," the international bestseller on the art of management practiced by the world's leading corporations, seems a bit dated, and I don't think we saw much excellence in corporate America last year, did you?

"Rank or yank" management refers to a style of business management where the top 20% of a firm's employees are promoted and treated to great rewards, while the bottom 10% are fired. Often, "rank or yank" management is accompanied by top management's talk of high business ethics. The result though, is the employees get the message loud and clear to produce at any cost and are spurred by the twin motivators of greed and fear. Produce at any cost can be dangerous, as we saw in the recent financial meltdown of 2008.

I first came across this descriptive term in this outstanding Barron's interview with William Black, Associate Professor of Economics and Law at the University of Missouri, Kansas City. "You don't directly tell your employees you want them to lie and cheat. You set up an atmosphere of results at any cost. Rank or yank. Sooner or later someone comes up with the idea of fudging the numbers," said Black. The problem, according to him, is that the system discourages whistle blowing and calls upon the cooperation of everyone. Thanks to Mr. Black for his candor in his interview with Barron's, and for coining a phrase which shall forever stick in my mind as emblematic of one of the less appealing facets of corporate America.

Personally, I have seen "rank or yank" in action. It combines the social pressure of keeping up with the Jones's, with the threat of the Grim Reaper of job failure. One can see where it can be effective as it combines the twin motivators of fear and greed.

But by having a name for this system of management, perhaps we have taken the first step towards dealing with it. Now we can better recognize it and its less appealing characteristics, and in the future, better deal with the repercussions. Rank or yank management is a term which needs to enter our national lexicon.