After my last post, I thought I was done commenting on stack ranking (for at least another year), but two things inspired me to write just a bit more. First, a few people flat-out asked about my opinions for alternatives; and secondly, a consultant added some ignorance to the discussion that gave me just enough motivation to write a bit more.
In this article, Dick Grote talks about the purpose of the stack rank, and for the most part, he’s spot on. Yes, a lot of companies stack rank, and yes, it’s a reasonable way in some aspects to identify both top and low performers. And then, he says this:
That’s because forced ranking makes it impossible for managers to declare that all of their employees are above average, he says, and that makes it easier to find and retain the top guns
So, according to this, one basis for stack ranking is bad managers – or lack of trust of managers. Either choice seems to me like stack ranking is going after the wrong problem. It’s not impossible to have a team of above average performers relative to other groups (statistically, of course, on a team of 11 people, five are above average, and five are below average, but all eleven may be better than fifty people on a different team. To our credit, most teams at Microsoft try to find enough peer groups so they can stack at least 50 people together, where the curve is a bit more fair.
The notion that stack ranking is a cure for bad or mistrusted managers grates on me, because I know there has to be some truth to it. Once up on a time, managers at MS had more control over budgets and rankings. The curve has always been there, but there was flexibility in rewards (and a bit more in rankings), but that’s gone.
As far as alternatives go, there is no one-size fits all model. If I got to be king for a day, I’d leave it up to organizations within the company to come up with their own methods of reviewing employees. I’d probably have to do it at the division level, but I suppose divisions could decide if they wanted flexibility at lower levels in the org. Budgets would remain the same, but it would be up to the division to decide how to distribute the rewards. The challenges of re-recruiting top talent and managing out poor performers would remain, and I’d make sure all performance plans included stipulations for both.
With my grand new scheme, Division A could decide that they wanted to continue with the traditional stack rank. Division B could decide that everyone gets the same flat bonus with extra rewards for top performers. Division C could abolish review ratings and give smaller “spot” bonuses throughout the year. Divisions D, E, and F could do something completely different if they wanted. I (as King) would offer feedback where needed, but I would trust division leaders to make decisions that would advance their business.
One of the great things about Microsoft is that you can move from division to division, completely changing what you work on, without leaving the company. An advantage of a decentralized system, is that employees could choose groups based on their review system as well as the technology or people. Some people (believe it or not!) like the stack rank review system – and those people could seek out a group that used that system. Others, may prefer collaboration above all else, and could find a group where the review model favored collaboration.
One worry of this system is what happens when someone moves from a group with one review system to a group with a different review system. For example, let’s say I’m about to get a ‘bad’ number in a group with a stack rank – so I change groups to a group with equal rewards for everyone. My simple solution (I always prefer simple) is to prorate the rewards based on time in group before the review cut off. For those that worry about dishonesty from the group I left, remember, that I always prefer trust over conspiracy, and I believe that the right thing nearly always happens in the long run.
Another worry along the same lines is how to evaluate an employee potentially coming to your group. If another divisions review system is different, how do you know how they performed. My answer to this is the same as it is today with the company wide system. Stop looking at the damn review score. Today, the ‘5’ rating is a ball and chain. You get no rewards – maybe because you’re in the wrong team, and you can’t change jobs. I don’t think we actually fire many 5’s – we just lock them into a job they don’t like until they quit…but I’m digressing… The point is that we hire smart people at Microsoft. A poor performer in one group is often a star performer in another. Talk to them, talk to co-workers and former managers and use that information to make a choice on whether they’re a fit for your group rather than a number alone.
And with that, I’m done commenting on stack rankings (besides answering questions in the comment section, of course). As I’ve said before, and as others have repeated, I don’t mind the system, and the parts I don’t like are a reasonable tax to get to play in the Microsoft sandbox.
I just wish it were better.