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Ford Ends Grading Quotas

Automaker to stop mandating number of bad reviews. Ford CEO Jacques Nasser's push to change the automaker's corporate culture has sparked employee dissent and lawsuits.

The Detroit News, July 10, 2001

By Mark Truby / The Detroit News

DEARBORN -- Ford Motor Co. announced today it is modifying a controversial evaluation policy by eliminating strict quotas that dictate the number of employees who receive poor job reviews, sources close to the company said.

The policy, part of Ford President Jacques Nasser's sweeping push to change the automaker's corporate culture, sparked widespread employee dissent and a host of discrimination lawsuits.

The move comes a day before Ford directors gather in Dearborn to -- among other things -- approve several senior management changes, Ford officials said. Martin Inglis, 50, head of Ford's North American operations will become the automaker's chief financial officer. Ford of Europe Chairman Nick Scheele, 57, will replace Inglis, Ford officials confirmed Monday.

Under Ford's employee evaluation system -- adopted last year -- Ford's 18,000 top managers are ranked as A, B or C performers. Supervisors are required to award 10 percent of managers with C grades. Those employees aren't eligible for a raise or bonus.

Two consecutive C grades can lead to a demotion or termination. Ford shaved the C mandate to 5 percent earlier this year. Now, according to sources, the automaker will no longer require supervisors to grade a strict percentage of employees with C grades.

Ford spokesman Jason Vines declined comment other than to say any changes to the policy would be announced to Ford's employees before they would be made public.

Although Ford is not abandoning the ABC policy altogether, the decision to soften it is a surprising reversal and a sign the automaker is concerned with sagging morale.

Dozens of Ford managers have filed or joined lawsuits claiming the grading system, as implemented, discriminates against older workers or white males.

Charles Jerzycke, 55, a Ford manufacturing engineer who joined an age discrimination suit against Ford after receiving a C grade for 2000, said he was pleased to hear Ford is reworking the policy.

"It sounds like a major improvement," he said. "But I think we will have to see the details and implementation."

Ford's decision to change the policy is "ultimately a reflection on the credibility of our claims," said Megan Bonanni, a lawyer representing 60 Ford managers in a class-action age discrimination suit.

"How often do you see a company change a program after depicting it as a wonderful tool?" Bonanni said.

James Fett, an attorney representing more than 30 Ford managers claiming reverse discrimination, said "this is an implicit acknowledgement that they are wrong."

Ford adopted the "forced ranking" system after studying its effectiveness at other large companies, particularly General Electric Co., where Chairman Jack Welch hailed it as a breakthrough human resources tool.

By requiring managers to give poor grades to a certain percentage of employees, Ford hoped to eliminate the tendency of supervisors to let below-average performers slide by with average reviews.

"Whether you like it or not, in an organization this big there are people that don't perform to our standards," David Murphy, Ford's vice-president of human resources, told The Detroit News in April. "You're never happy with them so you continually move them around. Why?"

Ford officials say the company remains committed to honest evaluations, but acknowledge the strict forced ranking policy has become a lightning rod for criticism.

Company officials have tried several times in recent months to explain the merits of the policy -- known internally as the Performance Management Program -- to employees.

Ford's retrenchment on the grading system is another setback for Nasser, who took over as CEO in January 1999. Nasser has moved quickly to try to change Ford from a paternalistic giant into a modern, nimble consumer-oriented company. But at nearly every turn, he has faced resistance from employees who feel passed by or steamrolled by the new Ford.

The senior management changes expected this week do not reflect a major shake-up that has been rumored for weeks in the wake of Ford's battle with Bridgestone/Firestone Inc., the automaker's declining U.S. market share, and other operating setbacks. Instead, the moves come because Ford CFO Henry Wallace, 55, and Vice-Chairman Wayne Booker, 65, are expected to retire by year-end, Ford officials say.

However, moving Scheele from Europe to Dearborn to run Ford's vast North American operations signals that the company is moving ahead to address several pressing issues.

The automaker's quality and manufacturing productivity have slipped and the company has suffered a troubling streak of recalls and poor new car and truck launches.

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