![]() ![]() Jessica Kriegel, chief scientist at Culture Partners, who has seen an increased use of quantitative assessments of employees, said that one reason stack ranking is The practice of comparing and pitting workers against one another often hurts employee morale, collaboration, and productivity, said Alexander Colvin, dean of the School of Industrial and Labor Relations at Cornell University, told Fast Company. Calling stack ranking a "byproduct of digital transformation,” he cautioned that “it’s not necessarily useful nor accurate.” ![]() New technology enables organizations to collect more data on workers, John Frehse, senior managing director at Ankura Consulting and board member of the Workforce Institute, told Fast Company. But, he added, “to make stack rankings work, there need to be objective performance measurements.” “If it’s done right, it can help employees who are ranking lower make improvements to their performance,” John Arendes, CEO of HR training platform Traliant, told Fast Company. Stack ranking is now used by 30 percent of Fortune 500 companies, HR software company Corvisio estimated. Yet, the concept is experiencing a resurgence, particularly among tech companies such as Oracle, Amazon and Meta. Rating-based performance reviews “often fail to change how people work, and dissatisfaction with the appraisal process has been associated with general job dissatisfaction, lower organization commitment, and increased intentions to quit,” a 2012 research report found. The basic concept, popularized by General Electric CEO Jack Welch in the 1980s and 1990s, was to rank every employee, then fire the bottom 10 percent. GE’s human resources function eventually abandoned the practice, which was ineffective in determining future potential, maintaining morale and increasing performance. Subscribe now to the Blogs Newsletter for a daily summary of the most recent and relevant blog posts at Computerworld.Ranking employees and firing a percentage of those at the bottom-also known as “stack ranking,” “rank and yank,” or “the vitality curve”-does not work, research has demonstrated, but tech companies are using it, Fast Company reported. So, employees will not know where they stand relative to others when they see their bonus check. That being said.what will probably happen is a kind of stack ranking that is less transparent. This also fosters bureaucracy and politics. The longer your tenure in a group, the higher your rating is likely to be because you perform better when you know the ropes. is good for justifying the elimination of bad employees, but overall there are better ways to evaluate performance and offer rewards.that’s counter to business goals.Īnother bad consequence that it would discourage risk-taking by incentivizing employees to stay in their current group. MOREīut this pseudonymous ex-Microsoftie isn't so sure the new way will be better: Everyone admitted that the entire system was pants. a litany of complaints about the stack-ranking system and complained that Redmond was losing talented people. The system turned into a nest of backstabbing and conspiring, where tongues had to be so far up the bottoms of management, it was possible to lick a manager's frontal lobe. While Edward Berridge puts it more colorfully: The move comes as Microsoft continues to restructure around the new "One Microsoft" strategy that was recently introduced by outgoing CEO Steve Ballmer. Vanity Fair magazine went as far as to blame stack ranking for what it called "Microsoft's lost decade.". ![]() But the policy won few accolades as it was implemented at Microsoft, with critics charging that it drove talented employees away labeling them as underperforming and forcing them to focus on competing with their peers. Stack ranking has its origins with General Electric in the 1980s under CEO Jack Welch. Microsoft may soon be a much nicer place to work. Microsoft has a sometimes brutal corporate culture, and has chewed up and spit out more than its share of talented people who got caught in turf wars and cross-fires. So Preston Gralla explains why it's significant: Lisa Brummel, Microsoft’s head of human resources “We will continue to invest in a generous rewards budget, but there will no longer be a predetermined targeted distribution” there will be “no more ratings.” MORE Even if all members of a team performed well.the manager was required to designate a set percentage as underperformers. Managers each year were required to put set percentages of their team’s employees into one of five groups affected everything from promotions to bonuses. Its controversial stack-ranking review system has long been the object of critical barbs by those who believe it lowered employee morale and stymied innovation. ![]()
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