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With the retirment of Microsoft CEO Ballmer, there seems to be a lot of talk about a intenral practive called "Stack Ranking" leadign to the downward slie of the company. Some of this discussion comes from this piece in Vanity Fair magazine:

http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer

Here is the money quote:

At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor. …

For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door. …

“The behavior this engenders, people do everything they can to stay out of the bottom bucket,” one Microsoft engineer said. “People responsible for features will openly sabotage other people’s efforts. One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the rankings.” Worse, because the reviews came every six months, employees and their supervisors—who were also ranked—focused on their short-term performance, rather than on longer efforts to innovate. …

The reigning line of thought in the Tech writer community seems to insist that this type of s"stack ranking" HR system stifles innovation and is what caused Microsoft to fall from the pinnacle to other tech companies such as Google and Apple. I'm curious what your thoughts are about the practice?

I'm just curious if a system like "Stack Ranking" is used where you work. I know it is in the Fortune 500 Corporation I work at.

It has certainly been used in companies that I have worked for although it was never that bad.

That sounds like a very plausible explanation for certain things that I have seen, and also heard second hand. Maybe that is why their own internal communication appears so terrible at times - it is a symptom of a much wider disease.

Remember reading about this. It struck me as one of the dumbest ways to manage your employees that can be imagined.

This is at first glance a terrible practice.

I have a team of 9 people that I manage. I very much have a mental ranking for them as to who the top, middle and low ends are. You know what I do with that information? Have the top employees work with the lowers to try and make them better. I want ALL of my employees to be equally ranked, and for that rank to be awesome. But to leave the stragglers on their own and not try to improve their performance reflects terribly on me as a manager.

I don't want to fire anyone. Hiring new people is easily the worst thing about being in a position where you hire people. It's soul shattering work reviewing hundreds of applications and having to deny people who are overqualified and down on their luck in the job market.

I'd very much prefer to salvage a poor performing employee than to create an atmosphere of rabid competition for hours or the job in general.

Reward top performers, sure. But to sentence poor performance to lose without giving any effort to promote improvement is a failure of management.

There is also the issues that arrive when you have a team of decent all around workers. What if there is no standout poor performer? You probably look for any little thing to nitpick at just so you can have the even bell-curve with low performers.

I am somewhat dubious. MS have never done anything innovative.

GE did this for years under Jack Welch, and they made a massive leap under his leadership. They called it forced rankings.

GG

The guys who do well get extras, and the guys who fail to provide profit get the sack? That sounds familiar...GW? Is that you Kirby?

In fact, it sounds just like every other buisness in the world. Make money or make like a tree and leave. Bonus cookie for who can name that line's source.

 Deadshot wrote:
The guys who do well get extras, and the guys who fail to provide profit get the sack? That sounds familiar...GW? Is that you Kirby?

In fact, it sounds just like every other buisness in the world. Make money or make like a tree and leave. Bonus cookie for who can name that line's source.

Except it backfires when employees learn to poison the opposition to make their own performance look better in comparison, which the OP's quote cites as happening.

That's true in any buisness too. If a rumour is around that there are fmgoing to be redundancy cuts, you do whatever you have to to make yourself invaluable as possible, including sabotaging the others.

 Deadshot wrote:
That's true in any buisness too. If a rumour is around that there are fmgoing to be redundancy cuts, you do whatever you have to to make yourself invaluable as possible, including sabotaging the others.

And as someone who has the authority to hire and fire people at will, I can tell you that I'd fire anyone who sabotaged ANYTHING having to do with the company or productivity. Employees at that level often don't have access to the big picture, and acting like they do can easily cost them their job and all those bonuses.

If management is trimming fat, you make your self leaner, not try to make others fatter to hide your own insecurity about your performance.

I don't doubt it's common practice, and it makes me hate people all the more. Heaven forbid people just sit down and do their jobs as they are paid to do.

 Deadshot wrote:
The guys who do well get extras, and the guys who fail to provide profit get the sack? That sounds familiar...GW? Is that you Kirby?

In fact, it sounds just like every other buisness in the world. Make money or make like a tree and leave. Bonus cookie for who can name that line's source.

No. Even if everyone does well, even if the company is better for the existence of every single one of them, stack ranking means you still screw over the guy who is least awesome. It's like saying "Thanks for being the best man at my wedding, but John gave me a kidney, so feth off."

The standard should not be "above average", it should be "good enough". If everyone is good enough, it shouldn't matter that half of them must by definition be below average.

Good enough doesn't drive for success. Good enough means "I can'5 be bothered." Good enough is complacency. Above average means work. At least this way the threat of termination keeps you pushing for the best performance. The company can and should fire anyone not up to scratch or underperformers.

 Deadshot wrote:
Good enough doesn't drive for success. Good enough means "I can'5 be bothered." Good enough is complacency. Above average means work. At least this way the threat of termination keeps you pushing for the best performance. The company can and should fire anyone not up to scratch or underperformers.

"Above average" means losing half your workforce every review period, even if everyone's doing a brilliant job.

I'm a software tester and most of my work is contract work at Microsoft. I can attest to this exact management style as being both destructive and deliberately implemented. What the article doesn't seem to mention is that Microsoft execs wanted people to leave. It's all about curtailing benefits costs and justifying H1B visas. Microsoft wants to push as much of their work off shore as possible. The problem is, unlike clothing or automobiles, there was no read workforce outside the USA to take the work. Since the mid 1990's, Microsoft used their artificially low retention as a way to lobby for expanding H1B visas to train an overseas workforce to do the testing and development they wanted. India and China's growth in the tech field are directly attributable to this. So, by keeping their "blue badge" workforce low, they shift the burden to contract workers and H1B visa workers. After all, by having your career employees leave, you don't have to pay benefits anymore. If they come back (usually as contractors) they do so starting from scratch. By locking out citizens from the work force, Microsoft can say to the government that there is a shortage of qualified workers and thus even more visas are needed.

Microsoft isn't the only tech company that does this, either.

I've been at a company that ranked departments, and individuals within each department, that tied pay increases (we don't really go for bonuses over here) to how well you did in each category. After the organisation pretty much collapsed in to infighting between departments (with one section trying to employ its own IT support after they got poor support and were overcharged by the company's own IT) they scrapped the whole thing and started to rebuild culture and morale.

That said, I'm not sure that's all of what cost Microsoft. I think it probably helps explains why despite billions of dollars being spent on each version of Windows the average user gets about the same functionality out of the system that he got 15 years ago. But we all still buy each version of Windows because we have to, so that doesn't really impact their bottom line.

What cost Microsoft, I think, is how despite being the largest IT company the world has ever seen, they somehow missed the potential of smartphones. I think that's got a lot to do with the company's primary revenue base basically being rent derived from their operating system monopoly. When the biggest source of revenue is basically free money pouring in, well over time that corrodes the culture of the organisation. Why take risks on new IT when we've got this massive cashcow? So instead Microsoft just lurched in to established markets, looking to use the strength of their Windows monopoly to take market share. Their business model ended up becoming using Windows as a platform to make their other gakky products consumer standards (remember the whole Explorer thing, or that Microsoft Games thing?)

And now we are where we are. The only question is how long before we're writing the same thing about Apple and Google.

 Aerethan wrote:
Reward top performers, sure. But to sentence poor performance to lose without giving any effort to promote improvement is a failure of management.

No - reward performance. Reward good stuff done wherever it is done, regardless of if someone else happened to do something even better this month.

By ranking employees in a formal sense and tying bonuses and other tangible rewards not to performance, but performance relative to the rest. I can create a lot of great stuff, but if someone else creates something better that quarter I only get the second best reward. So when I see someone else doing great work, I have a direct financial disincentive to not help them. I could see that their project could work a little better if only they tried this one new thing that I know about, but there's no way I'm going to tell them about it, because it will cost me money.

It's a terrible, stupid system, built on the idea that people are individually excellent or terrible. If that were true, why would we build companies at all? We build companies because most value is created in co-operation, people working together.


Automatically Appended Next Post:

 Aerethan wrote:
And as someone who has the authority to hire and fire people at will, I can tell you that I'd fire anyone who sabotaged ANYTHING having to do with the company or productivity. Employees at that level often don't have access to the big picture, and acting like they do can easily cost them their job and all those bonuses.

Of course, you'd have to identify the sabotage, and it's unlikely to be a case of someone sneaking in at night to smash up another team's workstation. Instead it'll be critical resources from another team being given a week later than planned, stuff like that.

And beyond sabotage, the bigger issue is a lack of co-operation. If someone is developing a project, and it looks great but they've got a stumbling block on one part, and I've got someone in my team that can develop that, well in a good, functioning company that person will move over for a period. But in a company with forced rankings that kind of thing is actually discouraged, because helping the other team get their project out will mean they go up the rankings, knocking me down and costing me money.


Automatically Appended Next Post:

 Deadshot wrote:
Good enough doesn't drive for success. Good enough means "I can'5 be bothered." Good enough is complacency. Above average means work. At least this way the threat of termination keeps you pushing for the best performance. The company can and should fire anyone not up to scratch or underperformers.

Sure, but doing that through ranking employees against each other is idiotic.

Look at the product of the team, and look for who did, and did not play an important role in making that product excellent.

A guy shouldn't be rewarded simply because he is the best out of a group of misfits and lay-abouts. Nor should a guy be denied a bonus just because his team includes lots of other high performers.

Instead you have to produce a system of assessment that leaves scope for recognising all quality performers, and idenfifying all poor performers. Ranking is both stupid and destructive of company moral and cohesion.

So you believe that people who can't do a good job compared to peers should be given a leg up? That's what I believe. If his team has high performers and he is falling behind, axe him. There's going to be one of those thousands unemployed who can do the job right. And if nit the others are doing well enough that they don't need him and I save his wages.

 Deadshot wrote:
So you believe that people who can't do a good job compared to peers should be given a leg up? That's what I believe. If his team has high performers and he is falling behind, axe him. There's going to be one of those thousands unemployed who can do the job right. And if nit the others are doing well enough that they don't need him and I save his wages.

Can you read what I said, please.

"Sure, but doing that through ranking employees against each other is idiotic."

This isn't about whether or not you identify and reward/penalise performance, but how you do that. And doing that by ranking employees against each other breaks down co-operation and puts them in competition with each other. It is a stupid system of review and reward.

All companies are made up of smaller units, and these smaller units are made up of smaller units, until you get to the individual. Here is the thing, there is no single person who can do everything that a company needs to do successfully to stay alive. Therefore, teams of individuals are required. Hierarchy 101 right?

In my experience, every person on the team has some strength and some weaknesses. No one on the team can do everything that needs to be done on the team. Therefore, the art of leadership is to get the right combination of people on the team. Looking at the success of teams as opposed to individuals seems to be a better process, and has always earned me above average results.

However, there is no doubt in my mind that my method is the exception and not the rule with my peers. It is controversial. I'm fine if they want to continue their stack ranking ways, because my teams consistently beat the pants off of theirs. That means when my bosses stack rank me with my peers, I have no worries.

 Easy E wrote:
All companies are made up of smaller units, and these smaller units are made up of smaller units, until you get to the individual. Here is the thing, there is no single person who can do everything that a company needs to do successfully to stay alive. Therefore, teams of individuals are required. Hierarchy 101 right?

Absolutely. I mean, if there was no improvement to be found in co-operation, why would companies get formed in the first place?

 Easy E wrote:
In my experience, every person on the team has some strength and some weaknesses. No one on the team can do everything that needs to be done on the team. Therefore, the art of leadership is to get the right combination of people on the team.

Bravo. You sound exactly like my current manager - who incidentally is the best manager I've ever had, both to those of us working for him and to his own management.