Forced distribution rating systems and the improvement of workforce potential: A baseline simulation

Through simulation we investigate how characteristics of forced distribution rating systems (FDRS), which require firing a certain percentage of the workforce each year, might interact with ratings reliability, selection validity, selection ratio, and voluntary turnover to improve average workforce performance potential. Results suggest that a FDRS could lead to noticeable improvement in workforce potential, that most of the improvement should be expected to occur over the first several years, and that improvement is largely a function of the percentage of workers to be fired and the level of voluntary turnover. Greater improvement is associated with higher numbers being fired and lower levels of voluntary turnover. The effects of bundling FDRS with recruiting and retention initiatives are also investigated.