As Microsoft is washing its hands of a controversial employee performance appraisal practice, Yahoo is reportedly adopting it.
Stack ranking systems—also known as forced ranking or forced distribution—require managers to rank their employees from best to worst, apply the rankings to a bell curve, and use the results to determine pay as well as who to fire.
Under such a system (first made popular by GE’s Jack Welch), an organization will terminate those employees who rank in the bottom 10-20 percent (or are otherwise put on a performance improvement plan (PIP) or other form of remediation).
The many workplace experts who decry the practice argue that stack ranking essentially pits employees against one another, creating a competitive work environment instead of a collaborative one.
According to Forbes.com, a November 12 memo by Lisa Brummel, Microsoft’s executive VP of HR, announced that Microsoft would be abandoning its 17-month-old practice of stack ranking and would now be focusing on teamwork and collaboration.
By all accounts, Microsoft employees loathed the stack ranking system. Vanity Fair’s Kurt Eichenwald reported in a 2012 article that “[e]very 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.”
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Meanwhile, however, Yahoo CEO Marissa Mayer has recently adopted the same controversial appraisal system. As first reported by AllThingsD.com on November 8, “employees there are becoming increasingly upset by an evaluation system instituted by [Mayer] that has apparently resulted in the firings of more than 600 people in recent weeks.”
According to the article, Yahoo’s new “‘Quarterly Performance Review’ system forces managers to rank some of their staff with designations of ‘Occasionally Misses’ and ‘Misses,’ even if it is not the case, via what is essentially a modified bell curve.” It also reported that Mayer denied that the rankings were forced in a recent staff meeting and referred to the rankings as “guidelines.”
This is the second time this year Mayer is making big news (both times, for perhaps the wrong reasons): As of this past June, the company decided to eliminate all employee telecommuting.
Additional source: The Huffington Post
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This has always struck me as a ridiculous system, particularly in high tech companies that are all about employment “the best and the brightest.” You could end up cutting an above average employee and then have to go through recruitment to replace him or her. Not to mention the effect on morale.