Some historical context
When I first started working in Talent Management in the last century, it was all about benchmarking and putting people in boxes. In Talent Management, 9-box grids were all the rage. The 9-box grid was invented by McKinsey (in the 1970s) and popularised by GE.
GE and the vitality model
In the 1990s, GE was revered as an organisation with Jack Welch as the CEO. Jack was an advocate for the critical role that talented people played in producing above average organisational performance. He popularised the vitality model, which is a “20-70-10” way of categorising an organisation’s people.
In the vitality model, the top 20 per cent of the workforce is considered most productive while 70% (the “vital 70”) work adequately and are valued contributors. The other 10% (bottom 10) are underperformers.
In this model, the top 20 per cent of the workforce is considered most productive while 70% (the “vital 70”) work adequately and are valued contributors. The other 10% (bottom 10) are underperformers. This philosophy was brought to life through a forced ranking process that came to be known – somewhat pejoratively – as rank and yank. In short, companies rank their employees against one another and cull (or fire) “underperformers”. Those at the bottom aren’t necessarily poor performers; they’re just ranked that way because, well, someone must be.
Thankfully not many organisations in Australia embraced the idea of culling the bottom 10% of people following a ranking process. However, to this day, many organisations’ bonus distributions continue to be decided following a forced ranking process, whereby most of the bonus pool goes to the top 20% and none to the bottom 10%.
The 9-box grid model
The 9-box grid was consistent with the vitality model in that the top 20% were worth investing in. See for instance an early version of the grid from GE below, including some very interesting language! Talent Management was openly described as “we invest a lot in some (the top 20%) and some in a lot (the rest).”
The term “war for talent” was coined by McKinsey in 1997. They have compelling evidence that good people make a considerable difference in organisational performance. And they deliberately used the word “war” to highlight that organisations are fighting with each other to get and keep people in the top 20%.
The 9-box grid philosophy created a war within organisations, or two wars, one, a fight between employees to be in the top 20% and second, managers fighting over who goes into the coveted star box.
In my experience, the 9-box grid philosophy created a war within organisations, or two wars, one, a fight between employees to be in the top 20% and second, managers fighting over who goes into the coveted star box. Indeed, watching a group of executives populate a 9-box grid is often a tense meeting with a sense of competition and scarcity given that some organisations literally have quotas as to how many people can be categorised to a higher ranking. HR departments try to bring objective evidence to the discussion.
However the data is usually contested and the way people are categorised and put in a box is often a matter of opinion. Understandably managers advocate for their own people and want to see them acknowledged and rewarded. As a result, the whole meeting becomes quite political where power, rank and influence hold sway. Worse still, we too often see white men over-represented in the categories considered most promotable.
Downsides of the 9-box grid
Whilst there is a lot to like about the simplicity and intuitiveness of the 9-box grid, clearly this philosophy to cherish the best and devalue the rest has its downsides.
- It’s widely believed to stifle innovation because no one wants to risk being on a project that could potentially fail — thus potentially allocating the person to a lower ranking.
- It de-incentivises teamwork because it’s really a competition for getting credit.
- A system designed around winners and losers also harms morale, wellbeing, support, and psychological safety.
What we need now
Today, talent is scarce and there is still a “war” for talent between organisations. Recruiters tell us of several instances where they have a good person signed up and due to start on Monday; and the person calls the Friday before to say they were rejecting the opportunity as they had a better offer.
The equation is now clearly in favour of the employee. Rather than employers having many people to choose from, employees get to be selective about where they work. So, retaining talent is now ranked as one of the top issues keeping executives awake at night.
The equation is now clearly in favour of the employee…. Retaining talent is now ranked as one of the top issues keeping executives awake at night.
Adapting to external challenges
Post pandemic, external challenges demand that organisations need to adapt at a rapid rate. The attributes and skills we value in employees now are a willingness to experiment and get out of their comfort zone; collectively, it means learning from failure and generally being more comfortable with ambiguity and uncertainty. To thrive in these situations and to keep talent, we need to foster well-being, teamwork, and psychological safety — arguably the opposite of a forced rank system.
Moreover, we are trying to do more with less. So, we need to ensure that everyone is performing well. But forced rankings ensure that someone is considered to be failing. These days, what organisation could afford to cull 10% of their workforce and be confident they are replaceable? Enlightened organisations set people up for success and manage serious underperformance on clear behavioural evidence, not a forced ranking. We also don’t need to create a war inside our organisations. It seems obvious that we need a new philosophy for managing talent.
These days, what organisation could afford to cull 10% of their workforce and be confident they are replaceable?
So why are so many organisations still using the 9-box grid? One explanation is that managers love its simplicity – it provides a quick reference as to where to finds stars that they can deploy on complex projects or promote into bigger and more complex roles. However, it really isn’t that simple. In practice, it’s hard to accurately put people in a box and more importantly, it does more harm than good for the people being ranked.
Retention risk of the 9-box grid philosophy
At People Measures, we work directly with participants who have been categorised into one of the 9 boxes. Being placed in one of the lower potential boxes leaves many people rightly feeling that their career prospects will be limited. This leads them to consider their career and what may be possible outside the organisation. The result is that an organisation’s “core players” or “workhorses”, as they are called in the original grid, become a significant retention risk due to the philosophy underpinning the 9-box grid.
People categorised as having limited potential may feel there is little future for them in the organisation and are at risk of leaving, particularly in the current climate.
Not surprisingly, many organisations keep the 9-box grid a secret from those who have been rated and categorised in the hope they won’t be offended. But, of course, the reality is that people find a lack of transparency and a lack of feedback offensive. It is quite sad that in this day and age, senior leaders can talk about people but not be transparent and developmental by speaking directly with them and helping them to improve.