> The process, called "stack ranking," requires managers to give about 5% of their employees a low performance evaluation to fit on a bell curve of relative performance.
...companies still use it ? Thought microsoft taught industry a lesson here
I managed a small team in a company that then used stack ranking. I hated the process and as others here mentioned pointed out many times applying a bell curve to a small population is bad math. While we still used the process I saw everything from voting blocs, managers intentionally submitting all of their employees ranked up one notch from where they should be, managers collecting "dirt" on employees managed by others so they could shoot down those employees during the ranking process and more.
The process itself was flawed because people had a tendency to stay in the rank where they were submitted because frankly managers didn't have the time, energy or interest in really talking through every employee. It was just easier to rubber-stamp the whole process and move on. Also it was nearly impossible to get rid of the process because of course people who had succeeded in it didn't want change. I couldn't in good conscience continue like that, so I took over rankings for my location. It went from one day to a week-long process and I made people vote anonymously and incorporated a ranked choice system and then aggregated the results. It was a far more time consuming process but IMHO fairer. I still hate forced ranking despite succeeding in it. It becomes part of your job - managing to the metric.
Vestiges of it remain because people still don't know how to distribute compensation without ranking people, particularly for employees that have the same review rating.
The problem with the 2000s-era Microsoft method, as I understand it, was that the population sizes they used were too small. Stack ranking was done at the individual team level, and that did indeed lead to people sabotaging each other, because in a team of 10 only 2 people could get the highest pay raises and 1 person would be placed on a PIP (or whatever the ratios were).
But yes, all major companies still do something like this AFAIK, just with a larger population size now. Speaking from my experience at Amazon, the target was around 4%, but this was across entire departments. My department was 300 people. Is it possible that you can have a department of 300 people where you can't find 12 people who are below-average performers? Yes. Is it likely? No.
I don't know how many people the lead in the article managed. If it was a team of 15, he has a legitimate gripe. If it was a team of 200, not so much.
That’s one of the two but the bigger problem is how you measure performance. It’s notoriously hard to measure outside of the simplest jobs and once you tell people they’ll be punished unless they juice a particular number, well, that encourages all kinds of undesirable behaviour: rigging tickets or other metrics, encouraging people not to do maintenance programming or hard tasks, setting competitors up to fail, not doing things to help or train less experienced colleagues because that isn’t captured, etc.
Yes, managers are supposed to keep that from happening but this policy tells them that a) you don’t trust them to do their job, b) their job now focuses on protecting their people from the system, and c) being busy playing the same game on their own personal behalf.
The way it was done at amzn was to get all managers for the department together in a room and provide information about each of their team members and why they were ranked the way they were. If an employee was doing a small number of hard tasks and providing a lot of mentorship it was quite the opposite, they were much more likely to get a "highly valued" ranking than be marked as a low performer. Obviously if you use stupid metrics like lines of code or story points closed you will get stupid results.
I mean I've never seen any performance "measurement" system that isn't just subjective review with another name. Objective metrics can be useful, and certainly could be a part of a manager's evaluation of an employment, but they never tell the whole story. Someone who closes out tons of tickets but is a complete asshole and hated by their teammates should get a worse performance review than someone who codes less but provides mentorship and guidance and is generally pleasant to work with.
That's the problem. The system wants to assign one number to performance and fire based on that yet even getting an approximation of that is hard
> Someone who closes out tons of tickets but is a complete asshole and hated by their teammates should get a worse performance review than someone who codes less but provides mentorship and guidance and is generally pleasant to work with.
They should get a talk with their manager about the attitude and if they don't fix it they should be fired; not wait for any ranking to cull them.
Largely you're still ranking your performers from top to bottom, so it's a matter of placing the line at the bottom in the right place to get the desired percentage. Even then there was still a lot of debate among department managers around people on the borderline least effective category. There were usually very clear outliers who were definitely LE (people clearly coasting, people who didn't show up to work regularly), and sometimes that was enough. Other times managers did have to push each other to be brutally honest about those who were borderline, essentially asking, "If you fired this person and got a replacement, would the replacement be more effective than the current person within 6 months?"
Keep in mind it was never a hard quota, though in my case at amzn I did have a few times where the GM (so manager of ~1500 org) pushed back and said not enough people were in LE for our department, in which case a few borderline people did unfortunately have to get put into LE.
Also seems to ignore these aren't replacement parts, these are your team mates or reports, actual humans with names and families attached. If they weren't coasting or not showing up for work, what you describe sounds like yet another alienating, dehumanizing process at work.
What's hellish is that the ranking is forced, you must put people on a PIP or rank them "low", which is absurd. Being told to meet a quota for low performers is bizarre.
> But yes, all major companies still do something like this AFAIK, just with a larger population size now. Speaking from my experience at Amazon, the target was around 4%, but this was across entire departments. My department was 300 people. Is it possible that you can have a department of 300 people where you can't find 12 people who are below-average performers? Yes. Is it likely? No.
>Is it possible that you can have a department of 300 people where you can't find 12 people who are below-average performers? Yes. Is it likely? No.
I mean, below average performers will be around 40-60% just because how averages work.
The problem is that the question is "is their performance low compared to team", while the question you should be answering is "is their performance low compared to the market.
If team's management is on point with hiring the "worst" won't be that much worse than average anyway, so if you want to replace the bottom few % you essentially waste time as new hires might be at same productivity level.
On other side if you recruiting sucks and 20% of the dept does the 80% of the job, it isn't going to help either.
If you have a hiring process that results in only a 4% bad hire rate, create a business right now because every business in the world will want to pay you massive sums of money for the secret to such an amazing process.
from my own experience, a bad hire rate of 15-20% is what I usually see accepted across the industry.
You're incorrectly assuming 4% are let go, which is untrue as many are provided coaching/guidance to fix performance issues, and not accounting for additional headcount.
No manager has direct insight into performance of 300 people (at least in tech). They have to rely on subordinate managers/teamleads, each of which can be unreliable for different reasons. Some may be playing politics, some may just be bad managers. Some will overhype their employees, some will be honest to a fault. Get them all in a ranking board, and all sorts of games get played.
If your team leads could be trusted to measure appropriately, you wouldn't need stack rankings because they'd correctly identify those under-performing. Stack ranking is conceding that your managers can't properly measure performance. Shouldn't that reflect more on management?
The stack ranking on my team at MS was done across a team closer to ~60 developers. Each manager managed 5 or 6 and then they would all get together and fight for their team members. It was insanely toxic. Not sure if every team was the same.
If the facts don't fit your theory, change the facts! The US obsession with force-ranking everything is unhealthy, and I say that as someone who has often been fortunate enough to end up on the right hand tail.
>> Stack ranking has received continuous criticism since General Electric popularized it in the 1980s.
I didn't know this existed until now. The problem with this (among others) is that I can never personally know where I stand. If I'm doing well, but being excelled by others, I still get penalized. There's no guarantee, it's almost random.
Also, I now have a new question to ask in interviews, and if it does exist in a hiring company, I can negotiate by declining bonus pay performance reviews and in lieu of ask for higher wages (not that any company would go for this).
Ah the 1980’s when Neutron Jack Welch (he kills the people but leaves the buildings intact) was seen as a visionary. He was ahead of the curve in massive layoffs while doing tons of mergers and acquisitions that years later seem to have been questionable at best. Nice to see this MBA hookum continue to survive like some radioactive zombie cockroach
That's about the only time I can think of where it makes sense. If you have to lay off some people, then obviously you want to get rid of the lowest performers.
But if times are good and everyone is performing well enough and contributing, why get rid of them? If they're not performing well enough, then you shouldn't need stack ranking to figure that out, and you don't need to arbitrarily set a percentage of employees to put on performance improvement plans or fire.
> If you have to lay off some people, then obviously you want to get rid of the lowest performers.
It depends. In medium and large (and even some small) organisations, the intention behind layoffs is not only to save on the salary bill, it's to cut those divisions, projects, groups initiatives and work units that are a net loss or that are not contributing to the bottom line.
IOW, the intention should be to get rid of certain positions; it's a side-effect that people are usually in those positions.
For example, at Amazon I would imagine that even the high performers in the Alexa team would be considered for layoffs over the low performers in the cash-cows.
Earning money is not really relevant to whether people are good employees or not; that's based on the market, management decisions, etc. I'm sure there were lots of great employees at BeOS, but the fact that the product failed financially wasn't their fault.
Companies change product strategies all the time to pursue profit, trim unprofitable ventures, etc., and that's all fine. But it's dumb to lay off good employees when they can just be re-deployed somewhere else, assuming the company isn't having financial hardship that actually requires them to shed headcount.
The rationale is that there can only be so many employees and if natural attrition is low then they’d prefer to re-roll on mediocre performers in an attempt to capture the top ones.
That's a bad rationale. Mediocre performers, are, by definition, average. Unless your hiring process has completely changed, you're not likely to get anyone better if you toss out a mediocre performer and hire someone new: the new person could be better, or could be worse. Moreover, the mediocre person is experienced and productive; the replacement will not be, and probably won't be for a long time. (If the mediocre performer isn't productive, then they're not mediocre unless most of your employees are terrible, and should be fired for bad performance.)
Just move somewhere people are incompetent and you'll be safe and the best programmmer. Unfortunately when you hit a new crossroad, you'll need to reach out to outside peers to get moving in the right direction and spend a lot more time on self study.
I am refusing to believe that a company has less than 5% low performant employee ratio. With pretty much everyone is pulling their weight with no employees that are plain slacking and/or bad hires that delivers less than expected.
In fact 5% is quite a low estimate in my opinion. I would estimate it 20%, easily 1 in 5
Maybe there is a bigfoot out there but I will refuse to believe until I see one
Stack ranking seems to be a solution for managers that are not doing their job. Either because they are trying to be nice or oblivious or just don't care. Since this guy quited to me it sounds like the first.
...companies still use it ? Thought microsoft taught industry a lesson here