IRS Warns Against "Mediocrity" While Capping Top Ratings: What Stack Ranking Research Says
The IRS is warning employees against "deliberately choosing mediocrity" at the same time a new OPM rating cap means many of them will receive middle-of-the-road performance ratings no matter how well they work. According to Government Executive, an IRS internal email told staff that a fully successful rating "does not mean mediocre." The research on forced performance rankings suggests the agency may get exactly the result it is warning against.
The New Federal Performance Rating Cap
In a September 21, 2026 memo, OPM set a fiscal year 2026 cap limiting the top two rating levels, Levels 4 and 5, to 40 percent of GS employees. Earlier, in July 2026, an OPM final rule removed the long-standing ban on forced distributions of performance ratings. An AFGE-led coalition is challenging that rule in court, so none of this is final.
The practical effect is that ratings are now partly a matter of ranking employees against one another, rather than measuring each person only against their own performance standards.
What the Private Sector Learned About Stack Ranking
Ranking employees against each other and forcing a fixed share into each tier is often called stack ranking, and several large companies have abandoned it:
- Microsoft. A 2012 Vanity Fair investigation, "Microsoft's Lost Decade," reported that every current and former employee interviewed called stack ranking the most destructive process inside the company. Microsoft ended it in November 2013, announcing there would no longer be a predetermined targeted distribution.
- GE, which popularized the "vitality curve," later dropped forced ranking.
- Ford dropped its rating quotas in 2001 and settled with older workers for $10.5 million in 2002.
What the Research Shows
Economic research points in the same direction. A 2014 study in the Journal of the European Economic Association by Cohn, Fehr, Herrmann, and Schneider found that cutting one worker's pay but not a peer's reduced output more than twice as much as cutting both. A 2013 study in Management Science by Berger, Harbring, and Sliwka found that imposing a forced curve on workers used to the old system produced a brief bump, followed by performance below where it started.
The lesson is simple: when only some of the people doing the same strong work get credit for it, many of the rest respond to that incentive. That is not a character flaw. It is a predictable response to how the system is designed.
When a Rating Becomes a Legal Issue
A lower rating under a forced distribution is not, by itself, illegal while the rule stands. But a rating can become a legal matter when it tracks something the law protects, such as an EEO complaint, a protected whistleblower disclosure, your age, or a disability. If your rating dropped and the timing lines up with one of those, document what happened and when.
If you believe your performance rating was influenced by discrimination or retaliation, Southworth PC can help you understand your options.
Legal Disclaimer: This content is for general informational purposes only and does not constitute legal advice. Federal employment situations are fact-specific and time-sensitive. Please consult a qualified federal employment attorney about your specific situation.