Most companies regularly appraise their employees, as this provides the opportunity to follow their performance and career development.
For the purposes of such appraisals, some companies (often those belonging to US-based groups) use a “ranking” method and in some instances the “forced ranking” appraisal method. This purpose of this system is to place employees into categories depending on their performance, a specific percentage of employees being allocated to each category. Top performers are closely considered in terms of advancement and incentives, while employees falling in the bottom percentage are required to improve (or ultimately leave the company). Forced ranking goes further than simple ranking, as raters have no choice but to follow the predetermined percentages, which are only indicative in mere ranking systems.
In the decision at stake, the works council and several unions of Hewlett Packard filed a claim against the management to challenge the ranking system implemented. Their claim was based on the fact that in the context of such a system, the performance of the employees is not appraised on the basis of their individual competences and an employee whose qualities are perfectly satisfactory can nevertheless be ranked as a poor performer. The claimants also targeted the potential consequences of this system on the employees’ psychological health, given the pressure produced by such a system.
In its ruling, the Supreme Court validated Hewlett Packard’s system of evaluation, but on the basis that the percentages were provided purely as a guide in the process of evaluation.
Therefore, on the basis of this decision, the introduction of a ranking system is not illegal per se, provided that the ranking is only indicative. In cases where the raters have no flexibility and must allocate employees to the various categories, the system becomes illicit. The difference between a valid ranking system and an invalid one can, however, prove to be quite subtle – if a ranking system is theoretically purely indicative but in practice results systematically in the forced departure of the lowest-ranked employees, the situation could be quite different.
As a conclusion: Yes, you can appraise your employees in France. This can be even done through ranking. But where the system is forced ranking, it is illicit.