It doesn't stop there. Under forced ranking, a truly great manager who's able to choose the best people is at a huge disadvantage to a political manager who instead builds a team that fits his or her bell curve. Granted, this manager still have to get things done, but if you're good with setting expectations - something a politically focused manager is always good at - you can get ranked highly even if you have a poor team, as long as your team doesn't complain and you set your group's goals acceptably low.
The folks who are good at keeping managers happy get the good reviews, while the deadbeats get the bad ones. Meanwhile, one of three things happens to top performers. Some catch on to the forced ranking system and flee to work for your competitor. Others, particularly those who are task-focused and not career-focused, stick around. The politically competent employees stick around, too, and often thrive. Unfortunately, then often kill your firm in the process.
Let's apply this to Microsoft. When you release a disastrous product such as the Zune, Kin, Windows Vista or the Surface RT tablet, you fire some of the people involved and move on to the next disaster. The organization never improves, as a good chunk of it was either intentionally hired to fail or is being encouraged to fail. Potential hit products - such as the Courier Tablet, Chrome Effects or the smartphone that should have been released instead of Zune - are killed off when the risk that the person behind the project would outshine his peers becomes too high.
Forced rankings also pit departments against each other. Look at Office and Windows. From Windows 95 to Windows XP, Office was the killer app driving Windows adoption. With Windows Vista and Windows 8, though, the app worked better on the prior OS, making it far more likely that Windows would fail but Office would hit its numbers. In the world of forced ranking, a strategy that both moves more of your product and less of a peers' is truly golden.
Bad Data Leads to Bad Decisions, Bad Products