Why It's Stupid To Rank Employees. 

You don't rank employees. You rank winners. Every podium stand only has three levels, third place, second place, and the overall winner.

Unless you're building a company with just three employees it's a waste of your time and horribly counterproductive to review your employees by ranking them.

Review them. And do it regularly. Rate them. And teach them how to improve.

But ranking employees is a clear sign of poor leadership.

To systematically pit employees against each other in order to place higher than the rest of the team they work with just shows that you don't understand the concept of high-performance.

The best teams are made of specialists with complimenting talents -- not redundant competitive abilities.

Ranking the members of a great team is as stupid as deciding which body part you don't need anymore.

Maybe having two arms does take up a little more space. Or maybe you'll just find that you're not as efficient and effective without all the right pieces in place.

Might look smart on paper. But flat out stupid when you actually do it.

Like most business challenges, the idea of performance and raking your employees is a complex one -- usually born out of good intentions to grow and build a more valuable company.

Here are the non-negotiable basics of long term business success:

  1. Bad employees need to go -- quickly.
  2. Good employees need to be challenged to exceed expectations.

Momentum gets broken when you stop rewarding good teams and only punish lower ranked individuals.

Great teams always beat great individual effort. Every time.

By the way, your ranking doesn't make you better forever anyways. Just the first few times you do it.

Whether it's Amazon or GE or myriad Wall Street banks, the result is a short-lived boost of effort with a long term downward spiral towards all the worst parts of human nature you find deplorable.

It's your behavior right now as a leader that will create that sickening situation.

Change it now while you can. Hire better. Inspire better. Fire faster.

Not because of rank, but because you're committed to a cause and focused on greatness.

Anything else is just stupid.

BusinessStephen Palacino