Vitality curve

A vitality curve is a leadership construct whereby a workforce is graded in accordance with the individual productivity of its members. It is also known as forced ranking, forced distribution, rank and yank, quota-based differentiation, and stack ranking. The often cited "80-20 rule" — also known as the "Pareto principle" or the "Law of the Vital Few" — whereby 80% of crimes are committed by 20% of criminals, or 80% of useful research results are produced by 20% of the academics, is an example of such forced rankings. In some cases such "80-20" tendencies do emerge, and a Pareto distribution curve is a fuller representation.

According to a 2013 survey by WorldatWork, the method is used by about 12% of US corporations. According to The Corporate Executive Board Company, it is used by 29% of companies. According to Dick Grote, a consultant who specializes on the topic, 60% of the Fortune 500 companies used some form of ranking in 2012. According to a statement by CEB Inc., quoted by Washington Post of July 2015, 6% of Fortune 500 companies have stopped using rankings.

The vitality model of former General Electric chairman and CEO Jack Welch has been described as a "20-70-10" system. The "top 20" percent of the workforce is most productive, and 70% (the "vital 70") work adequately. The other 10% ("bottom 10") are nonproducers and should be fired. Rank-and-yank advocates credit Welch's rank-and-yank system with a 28-fold increase in earnings (and a 5-fold increase in revenue) at GE between 1981 and 2001.

In Straight from the Gut, Welch says that he asked "each of the GE's businesses to rank all of their top executives". Specifically (in accordance with the 20-70-10 model) the top executives were divided into "A", "B", and "C" players. Welch admitted that the judgments were "not always precise".

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