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Microsoft drops stack ranking system in effort to boost employee collaboration

Microsoft Building 99

Stack Ranking is a system that companies like Microsoft use to measure and rate the performance of their employees. Amazon, Facebook, and Yahoo all have their own versions of stack ranking. It’s a pretty controversial system for those involved, both currently and previously with the company. And it’s also no more. Microsoft has sent out an internal memo to employees letting them know that the system will cease to exist, starting from now.

What is stack ranking? It’s a system that Microsoft used to rank and determine employee performance. Leaders on teams were required to rate employees working under them as either top performers, good performers, average performers, or poor performers. That in and of itself isn’t necessarily bad, but the fact that only a given percentage of employees in a given unit could be a top performer vs. a good performer is where it falls apart.

For example, in reality you might be a good employee, but if the leader of your unit has already given out the allotted "good employee" slots to your coworkers you might fall into being labelled as an "average employee". Even though you’re a good employee, the system forces someone to need to be average and poor performers.

The stack ranking system within Microsoft has been heavily criticized (and even supported) for years. We won’t get into the argument of whether or not you can get better performance using the system. So what’s Microsoft doing now? According to the internal memo sent out by Lisa Brummel, head of human resources for the company, there will be a new system implemented that focuses on ranking employees on how they fit into the “One Microsoft” plan. That is, teamwork and collaboration have been given priority. We’ll hopefully see divisions within Microsoft cooperating with one another more readily over time.

Thoughts on Microsoft removing the stack ranking? Don’t forget to head to ZDNet to read the full memo that was sent out to Microsoft’s employees.

Source: ZDNet                                                                                                                                  

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Reader comments

Microsoft drops stack ranking system in effort to boost employee collaboration

66 Comments

Seriously. Many major corporates have adopted this and it's killing the employee morale and overall innovation. My company has this in place and man it's a major bummer when the financial year comes to a close. I don't know why, even though i don't work for Micrsoft, i still feel relieved and happy for the company. This stack ranking has been attributed as the main reason for decline, deviation and (image) detoriation of Microsoft. We can bet on it that effective immediately Microsoft employee base will shift its gear into place and get back into the race for next gen innovation in every manner. As a WP8 supporter, i can see a brighter future thanks to this decision alone. Good on you MSFT.

"Best decision ever."

Agreed 100%

Stack Ranking is just about the dumbest system ever.  As an employee in any company, you know you are being compared to your peers.  But a system like Stack Ranking just makes that comparison as rigid and ass-backwards as you can imagine.

If this is not the best decision ever, it won't be far off from it. I can see Microsoft getting only good things out of this with employee morale skyrocketing. I've already seen a friend who works for Skype tell how this news made his day.

Yep its micromanagement at a macro level, total paradox. They need to focus on outcomes vs net cost and use mentoring programs to cultivate talent. The 90s are over!

Agreed, I don't work there, but have a couple of very sharp friends that left Microsoft recently in part because of that system. Good on Microsoft for getting rid of it.

Yup. In this system, don't you feel that it's more advantageous to you to focus only on your stuff and not "waste" any of your precious time helping others?

Exactly! Also, under this system, it's more advantageous to spend time selling yourself instead of doing a better job and thus helping the company and its clients. If you happen to have a job where selling yourself is not considered a "must" to do your job well (e.g. software development) and you have a manger that happens to prefer good salespeople and/or are too far away from you to recognize good employees, you're doomed.
So - good decision, MS :-)

I guess the idea is that overtime you're constantly only keeping the "best" employees. But at some point everyone becomes the "best" right? 

It's at best a short term solution that shouldn't be used for longer then 2 years or at some point alter it.

think u should ask mary joe foley . stack ranking does nothing in my book and should be left to bankers and wall street fat cats..

stack ranking actually has a benefit and a major downside. Benefit: Bad emloyees get filtered out pretty quickly. Downside: Employees fight internally as they compete for the sake of beeing the best in their respective teams. This is really really Bad! Collaboration gets extremly ugly with this.

Another bad angle of this is that once the poor employees are filtered out, the system will continue to produce "poor" employees, since there must always be x% of the team's employees in that ranking category. So as a result, the team will fight each other to survive in the upper tiers (since the "poor" employees will be the first to be let go).

Productive way way to run a team, eh?

all great points.  Teamwork was against the DNA of a Stack Ranking culture.  I am thrilled Microsoft is getting rid of it... My only complaint is that it took SO LONG!

Exactly. Imagine trying to build a tram to work on a project. If you choose a group of top performers, by the time of evals some of these top performers will have to be ranked as poor performers.
Top performers are penalized for working together with other top performers.

The intent of the system is to prevent managers from handing out "top performer" scores to all of their employees. Usually a financial incentive is tied to the rank given to the employee and there are some managers that want to take care of all of their employees so they hand out the highest rating to everyone that works for them. The "bell curve" that must be adhered to with stack ranking prevents this and saves the company money.

This is the intent of the system, but the reality is it makes employees fight to look better than their peers so when it comes time for reviews the managers remember you for all of the pretty power point presentations you put together. At the end of the day there is more time spent internally jockying for visibility amongst managers than there is time spent trying to help the company become better. 

I know all of this well as I am an Engineer at a large automotive company not far from Microsoft... Without a doubt it is one of the most aggravating aspects of working at this company. There are a lot of positives about working here, hence I don't want to leave, but I loathe the stack ranking system and seeing how it makes employees interact with one another.

Congratulations to Microsoft for finally doing away with this system and seeing how much harm it was doing to their company.

I can tell you horror story after horror story of it's use at Intel when I was there. Especially when you boss is in another country, or the manager that transfers in and brings along some his friends. But you know your screwed when your manager asks you two weeks til ranking and rating to write down everything you did. Or just other employees taking credit for your projects. It goes on and on. Glad Microsoft has done away with it. Smart move.

When i got the news this morning i was pleased. However i don't have anything against the system. In a team of stars, some star will always shine brigther than others. What was wrong was that thos shining less bright were encouraged to leave.

I wouldn't have a problem with it if there weren't forced "low performers".

I've never worked in a system like that, but to me the idea behind it doesn't make sense.

Great idea, finally. Now they can actually start colaborating the way any big company must in order to be as inovative as possible.

My company still uses this ranking system and I still hate it since it never reflects reality. Maybe I should check job openings at MS...

Stacking sucks! Its used at my company. I have seen others who are good not get what the deserve because the only get so many allotted for each level. Dumb!!!! ,

I don't think Steve Elope will do so well on the new system if the rumors of what he would do are true.
:)

The U.S. Army uses a similar scenario for rating officers, except they use the terms "Above Center Mass," "Center Mass," and "Below Center Mass."  It's all relative terms...which is really annoying.  Just like the stack system, if you are an average employee compared to a group that is all well-above average, you're still graded as average.  Without context, nobody looking at your review/evaluation can tell how good you really are.

Navy does it as Early Promote (EP) Must Promote (MP) Promotable (P) Shouldn't Promote (SP) and each one adds (or minuses for SP) to your final multiplier for your promotion period exam... And they, like stack ranks, might only have a couple EP's per pay grade... So its pretty much the same thing really. The army system sounds kinda dumb, since you definitely need to stay in center mass when engaging a target... Above is just as bad as below center mass, if not worse. If you shoot an engaged target in the head (above center mass) you will get in big trouble, as opposed to shooting them in the leg (below center mass) where you'll probably have to go through weapons qualification again... Silly naming convention if you ask me...

Kinda goes against the rumored Elop plans, don't it? Why drop the projects your people are all supposed to be cooperating on. Perhaps all the applicants are to take this as a sign they're not going to fit in.

Elop hasn't moved in, nor has he even been confirmed to be the next CEO (in the public eye, the search continues, but who knows what's going on behind closed doors?). Anyways, Elop is not yet a part of the company, so he has no influence over it.

As such, business continues as normal within Microsoft. Just like how even though Microsoft has bought Nokia, until the deal has completely gone through, the two entities may not benefit each other in any way that would be deemed unfair to competitors (hence why the collaboration between the two companies has someone gone down, and almost definitely why Microsoft didn't force the cancelation of the Lumia 2520).

So yup, business as usual in Microsoft, but I'm just glad they're dumping such a flawed system. The increased morale should no doubt find its way into Microsoft's products.

Frankly, I think that was someone with an agenda attributing the thought to the supposed front-runner for the CEO position, knowing full well that he couldn't give a statement either way. Probably ValueAct or some other asset-stripper interested more in short-term stock performance rather than in the long-term health of the company.

 

The fact is that Xbox is too integrated with Windows to sell off to a competitor. It runs the Windows kernel, Hyper-V is the hypervisor on Xbox One, IE is the browser, and Xbox One will use Windows Runtime APIs for developing apps. I'm not sure if Windows 8.1 apps will run directly or whether some modification is required (other than just saying 'yes this package works on Xbox). Selling Xbox to a management buyout makes no sense either if the reason for selling it is that it makes no money.

Why do companies want to keep quantifying things, evaluate on performance and results.  Very subjective, but best way.  When you start quantifying things, people get paranoid and it starts office politics, kill it, everybody work together and everybody is rewarded together. 

Probably wouldnt take long to see some slackers, that is when you get rid of them.  Of course easier said than done. 

 

 

HR depts the world over killing what made the company they work for great. How they gain so much influence is beyond me.

Stack ranking isn't the problem. I'd say C#-ification of MSFT is worse. In my day it was VB code monkeys slamming out half-assed demos. C# made it even worse. How many failed C# APIs were produced by MSFT in the 2000s (WPF, etc.)? They're all bloated, poorly-performing, glorified demos that never should have been released. Compare the performance of WinRT, another C#/SilverLight offshoot, to Win32 in Windows 8. WinRT is orders-of-magnitude slower. Compare WinPRT to an app written in C++/Direct3D. I can draw complex D3D scenes at dozens of frames/second ... while bringing up a simple XAML page with a dozen buttons takes a visible amount of time. It's pathetic.

Finally.  As someone who spent 12 years at MS off and on I have to say this is the best MS news I've heard in forever.  I hated what it did to team atmosphere, I hated that focus was on end of year reviews rather than putting out a great product.  It was horrible, and many good people who were simply not the best communicators suffered for it. 

 

This is awesome.  I hope my current employer follows suit.

Wow!!!!!!!!!!

Finally!!!! I hated it from the day i joined MS and till the last day i was there!!! It was the worst thing ever in MS. I dont even know how you can FORCE people to fall into a certain category. You set up some employees for failure even before they start and its the worst thing ever.

 

Now i can consider rejoining. ;)

Just in time when yahoo! gets slaughtered by the media for its stack ranking system. What a coincidence...

I don't understand this. Is one's "rank" made known amongst the employees? If so, I could see that causing beefs. I never was a fan of the "everybody is a winner" attitude because it simply is not true, especially in the job place. I assume they're going for sticking to a yearly eval now?

The problem comes in when they force a distribution on the system, and managers who may have only 1-5% below-average employees are forced to offer up 10% as sacrificial lambs, or those who may have 25% really doing excellent work can only give 20% of them high rankings.

Based on what I hear, the big problem is that only so many of each rank can be given out. In theory, this prevents managers from getting cozy and writing off all their employees as, "Above Average." In reality, it means that people who are doing a fine job can end up being on the "Below Average" list, which seriously jeopardizes their job position.

What it ends up with, is that employees are more focused on pleasing their bosses and improving their images to avoid losing their position, than actually improving the company. With this system out of place, employees can breathe a sigh of relief and focus on their work. Hopefully, the newly increased moral will trickle down into Microsoft's products, which can only be for the best.

   Just reading about the system irks me. It seems so counter-productive. I'm sure they lost a lot of talented people because of it.

To be fair, Stack Rank and its various versions is the industry standard.  I have never worked at a tech company that did not implement some version of it.  So while it certainly does cost you talented people it costs virtually everyone the same across companies.  MS is the first major I've seen abandon it, and hopefully others are paying attention.

I'm curious, does Google have it? Ruthless as though their business practices may be, one must admit, they do treat their employees very nicely, with tons of benefits. Honestly, if it weren't for the fact that I think many of Google's business practices were evil, I'd love to work for them some day.

Yes, Google also uses Stack Rank.  So does Apple, Amazon, HP, Intel, Yahoo, GE and many, many others.  People I know in those companies universally hate it.

 

BTW, Google ain't all that.  The atmosphere may seem 'fun' to work in until you realize its designed to keep you at work as close to 24/7 as possible.  They discourage remote work and do their best to keep you in the office all the time.  Sounds great when you are fresh out of college and have no social life yet, but as you get older, start a family, etc, the Google atmosphere quickly becomes a hinderance to any sort of a work/life balance.  MS used to be this way(I worked there in the late 90's) and as thier workforce aged and started quitting over the time demands they changed to better accomodate work/life balance.  Now they will actively penalize you if you do not actually take vacation or work too many hours.  Very different atmosphere, and it is for the better.

That is not entirely true. Amazon does have ranking system, but Amazon do not have the forced curve. Everyone could be at any rank altogether.

Um, not they cannot.  I've worked there.  They do not permit an entire team of "Exceeds" or any such thing.  They have done a decent job of keeping it at a higher level to have larger pools rather than having to pit only five people against each other.  But they do use stack rank, and yes it enforces winners and losers no matter what.

I work there as well. Yes, they probably won't let the whole team be under the best ranking, but this doesn't happen in reality anyway. But Amazon, at the very least, do not force people to be under Under average ranking like Microsoft. Everyone could be under average altogether.

About time. Stack ranking is only good if all you care about are stupid metrics not managed properly by shitty managers and you don't care about your employees as people and don't want them to cooperate.

About time. Stack ranking is only good if all you care about are stupid metrics not managed properly by shitty managers and you don't care about your employees as people and don't want them to cooperate and your morale to exist... Period. At my previous job sups fought sups and reps fought reps. I would help other people then get yelled at for making her numbers less relevant. When one person is the winner, everyone else is the loser. It was a company of over 1000 employees in just my building. It was a shit hole and lead to alcoholism in many people, health deterioration, excessive weight gain to many people (including myself), and countless of my friends seeking psychiatric help... At least that was covered by the health plan. In short, fuck the Verizon wireless call center environment and lack of insight and managerial skills across the board.

Love the idea, I could only dream of WP8 #1 and if this could help which it sounds like it will, I'm all for it.

My previous employer (a Bank company) use this stack ranking system. And sure it did destroy collaboration spirit within the team. And the damage is greater on a small team since the chance to be the best performer is slim (smaller the team, smaller the slot because of fixed percentage). I quit that job since I can't work on an environment that coworkers are constantly tackling me down instead of building something useful for the company.

Excellent decision by Microsoft though i work it support company.

Many good employees don't get good rating because of old system (slot system)

Team work is important