Stack Ranking is Life
First the disclosures: I currently [previously - left MSFT in 2014] work at Microsoft, these opinions are my own, and reflect many other experiences, since I have been at MSFT for less than a year.
I have
been “stack ranked” at previous employers and in school. In fact, I’m pretty
sure I have been stack ranked since age 2 - when my younger brother was born
and I was no longer the cute baby. I’m not sure who thinks that success in life
is not about how you compare, or rank against other people.
The process of stack
ranking raises dozens of questions, and a I note a couple of major disconnects that lead to the strong negative feelings
about the process.
What is the Stack Ranking Process Trying to Achieve?
What behavior/activity are you rewarding: firefighting, hero
work, or solid day-to-day execution? At one of my previous companies we valued the message: "own it, do it, done...". Which led to plenty of stuff getting done, but not by the most appropriate person or in the most effective manner.
Teams are created to leverage skill sets to deliver more work than an individual. If the reward system recognizes the individual over the team, then hero work becomes the norm. Can the hero, or "franchise player" always carry the team to the goal?
What behaviors are you punishing? Are you punishing those behaviors that execute reliably and predictably; like planning and managing? Here is a guarantee: you will get exactly the behavior and culture that you reward.
What message are
you sending to the "non-winners"? Is this an exercise in softening the blow for those that
should be fired?
Why Stack rank on an annual basis?
Why not more or less frequently?
Is it possible for a great player to run into an extended slump of productivity, to fail? Is it possible that a weak player might step up and become wildly successful? Why wait for annual reviews – prune poor performers early.
If performance varies day-to-day or year-over-year, should your rewards system be locked to a calendar? Moving away from Spot Awards and basic recognition of a job well done is corporate cancer. Daily execution of key work should lead to recognition.
What impact does team or company dynamics have on individual performance? Without diving too deeply into the economics of pencil fabrication, how do you compartmentalize the efforts and reward the successes of a person in a large organization?
Whatever Happened to Humility?
How does one person on a team earn a reward without the efforts of the entire team, and how do we separate this from “someone else built it” mentality. As a project manager it has been my philosophy to push my team to the front of the stage when we win, and shield them from criticism when we fail.
- Can you be an excellent player on
a terrible team?
- Can you have a team of excellent players and still lose?
Disconnect #1 - Out-running the Bear
Does stack ranking lead to "out-running the bear" behavior? You don't have to run
faster than the Bear, just faster than your peer. Are middle manages tasked with developing talent -- rather than suppressing talent, or riding upon the coat-tails of talent? Does your company have an entrenched bureaucracy that eschews the new guy on the block? Are you attracting, retaining and promoting talent, or is there a good ol' boys (and girls) club stifling new growth?
Disconnect #2 Performance and Bell Curves
While HR may see a perfectly shaped bell curve of performance, most employees see a negative skewed curve of near-optimum performance. First, stack ranking does not create bell curves. Someone is #1 and someone is number 999,999,999. technically, that is a flat line. When applied at the team level, it means the "worst" person on a great team will be branded a loser. HR may use categories to divide the list into a manageable scales (ranking 1-5, or A, B....F), which may form a curve. "Most of our employees are average, and a few are at each end of the performance range."
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The most intense conversation during reviews is not between managers and employees in the middle of a ranking, but at the transitions. The proper question: "why am I a C rather than a B", or a "4 rather than a 5"? If the employee wonders why they were ranked a 5 rather than a 3, then there has been a severe disconnect.The conversation becomes harder when a resource on a high-performing team compares himself against members of low-performing teams.
Do You Want to Run a Successful Start-Up?
You want your team to execute based on the lower curve - a curve of very high performers with a good supporting cast. A good leader will recognize that performance will change as the company evolves, and will be prepared to respond.
Other Disconnects
If stack-ranking is used to weed out the non-performers, the Jack Welch method, after you cut the first X%, then the next X%, then the next – are you cutting talent just to meet a number?
Does a "Dream Team" guarantee a medal?
If your new employee intake process is robust how do you reconcile hiring "A" students, then give them a "C" grade?
What does stack ranking give to employees ranked closest to the median?
The employees at the middle of the curve gets to see which behaviors to avoid, and which to emulate. They also get to see how far they are from either extreme. They get to see average pay raises, average bonus, and average promotions. But what motivations do they adopt; active and supportive, or passive-aggressive? Your evaluation process will spawn behaviors that may not be attractive.
Bottom Line
I'll stream a little Chauncey Gardiner: If you don't allow weeds into the garden, your plants will grow big and strong. We should welcome the inevitable seasons of goal setting, reviews, and stack rankings.
But, everyone should be aware that high performers don't really like the taste of average, and the competition is willing to transplant proven talent.
Tot1
When school restarted in September, they were not the “new kids”. Tot 3 joined a soccer team and Girl Scouts, Tot4 joined Boy Scouts and took ice skating lessons. We spent the fall driving to games, practice, meetings, and outings. The girl scouts are very practical. They have had outings to see how marketing is used in the supermarket, how Panera runs a bread store and an historical tour of old-town Snohomish. The boys, well, bottle rockets, pumpkin bowling and bawdy campfire songs. 
