Channeling Machiavelli:
• employee ranking dispenses with the silly notion that an employee's performance review should have anything to do with what they actually accomplish during the review period. Instead, the performance review becomes a beauty contest where the goal is to impress as many of the judges as possible, which often involves ego-stroking and ass-kissing unrelated to actually doing any useful work.
• thriving within a company that uses employee ranking for performance reviews requires a considerable degree of social intelligence. Think about it: you need to outwardly appear endlessly helpful and self-sacrificing to your colleagues while actually identifying and seizing every opportunity to make them fail at their jobs, so you look good in comparison. Wouldn't any high quality company want to promote employees capable of successfully playing this game?
• every sensible person agrees that managers in general (and C-suite executives in particular) are horribly overworked and underpaid. The beauty of employee ranking is that managers are not burdened with the time-consuming and unpleasant job of defining tasks for each direct report such that the result of their collective efforts will be a net benefit for the company.
• it's true that if layoffs are scheduled in a department, managers will need to rank the employees from high to low and dispose of the low-ranked employees. The beauty of employee ranking as a standard performance review technique is that it institutionalizes a layoff-is-around-the-corner atmosphere and thus keeps employees right where you want them if you are a high quality manager: beaten-down, cowed, and terrified of losing their jobs. What good is having power if you don't use it (or threaten to use it)?
Full disclosure: I spent the last four years of my professional career working for a large American war contractor that used employee ranking. It was hilarious how the company HR department would continually spout nonsense about 'teamwork' while employing a performance review system that promoted anything but. The amount of backstabbing among my fellow employees as they tried to win the annual beauty contest was remarkable.
