forced distribution

Definition

A rating system used by companies to evaluate their employees. The system requires the managers to evaluate each individual, and rank them typically into one of three categories (excellent, good, poor). The system is thought to be relatively widely-used, but remains somewhat controversial due to the competition it creates, and also the reality that not all employees will fit neatly into one of the categories and might end up in a category that does not reflect their true performance. One of the first companies to use this system was General Electric, in the 1980s.