From the Hotline: 9-Box Method of Performance Management
Question: Please provide us with more information regarding the 9-box method of performance management, including any benchmark data you have.
Answer: The “9-box” system has been around for a number of years, pioneered by McKinsey and practically implemented by Jack Welch at GE. Used primarily as a succession planning tool, we have not seen any benchmark data outlining the distribution of the employees “per box”. Some organizational development experts claim that the only useful benchmark data regarding performance distribution would have to be industry-specific or relative to companies performing at the same levels in order to provide any benchmark comparisons that could be useful to the track performance management trends.
As it was originally envisioned and used by General Electric (back when it was referred to as the “Stars and Dogs” matrix), the general thinking was that a company would have less than 5% in the lower left hand box (dogs) where performance and potential were both low. The rationale was that those were the employees you were managing out of the business. Low performers with potential were given more attention to improve; if not they would slip into the middle and lowest box on the left side for managing out of the business. The company would need to decide whether to keep the low potentials that had medium to high performance levels.
Conversely, the 10% of employees in the top right hand box (stars) were given the most attention for succession planning and development. The rest of the general thinking was that a company would be performing at a high level if 80% of the employees were working in the middle boxes (mid-performance, mid-potential, mid-performance, high potential, high performance, mid-potential) as well as the 10% at the “star” box (high performance, high potential).
Distribution of ratings among the boxes should truly be determined on how well the organization is meeting its strategic goals as well as how individuals are contributing to those goals. High performance companies may naturally have a higher distribution of employees in the sweet spot of those 4 or 5 boxes, while underperforming companies may have an entirely different distribution of performance.