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What Is "Rank and Yank"?
Rank and Yank is a term used to describe a process by which a company ranks its employees against each other, and terminates the employment of the people at the lowest end of the ranking (that's the yank).
The term probably came into being to describe the process used at General Electric (GE), and associated with former CEO Jack Welch.
The purported purpose of rank and yank is that by firing the worst performers, and replacing them, the company will end up with a better workforce. While Jack Welch and GE had considerable success while using this technique, it's likely that their success had nothing to do with this particular technique, and much more to do with the leadership ability of Jack, himself.
The technique, at least on the surface, sounds logical. However, it will only work if certain conditions hold. And, the cost of hiring people to replace the fired employees can be significant.
Also, there's no guarantee that the new employees will be better than the old, unless the hiring process if exremely effective. On top of that when rank and yank is used, the new employees need to learn their jobs, and will take a significant amount of time to come up to speed.
See also: Why Employee Ranking Systems Lead To Disaster