Stack Ranking: Don’t Do it!

It worked for GE!

Jack Welch is generally blamed/credited for the forced rank, ‘rack and stack’ approach to performance assessment. In its purest form a bell curve is imposed at all levels of the org with a forced percentage of people at each performance level. The gruesome details are all over the internet, including on Wikipedia.

Maybe this works great when you’re building jet engines and selling light bulbs. It is a bad way to make software! In this system, your top team in the entire company has to have one piece of toast.

Thank you, Donna!

One of the truly great things that my employer has done is to shift us entirely away from this method. We now practice ongoing feedback . Donna Morris has written and tweeted about this quite a bit. Here’s a nice summary on slashdot. The comments are gold!

The right way to do this is with continuous feedback and an engaged get well process for low performers, certainly not at the end of the year.

And yes…

Microsoft

did end up abandoning it.

Yahoo

In a fascinating linked in article about how Marissa Mayer refused to fire 5000 ‘yahoos’. She stood up at a company meeting and said ‘No’, ‘No’, ‘No’ when the topic of massive layoffs came up. She told the board:

Mayer told them that layoffs of any kind, let alone 35 to 50 percent cuts, would be too damaging for employee morale. She said that Yahoo’s basic infrastructure was so byzantine and jerry-built that it would be unwise to blindly rip whole teams of people out. She said Yahoo was going to need all the talent it could find to turn around, and she didn’t want to risk putting good people on the street.

Byzantine! When was it ever good to be Byzantine?

However, it turns out that what she did instead was to enforce stack ranking, with predictable results. I think I have to give her a pass here, since she did something that was right for the technology (not cause chaotic departures) and was better for the people (low performers out!).

That Said…

if you are not trying to do a massive turnaround you want to stay away from the stacks.

The Year End Review

2015As the end of the year, some unfortunate managers try to roll up their compensation, feedback, goal-setting, project planning and gawd knows what else into a single painful & stressful exercise. Painful for the manager, stressful for the employee. At one of my old jobs, reviews were so important we did them every 13 months!

However, like many seemingly intractable problems, this one can be solved by decomposition.

How much $$?

First, let’s look at from the individual contributor’s POV: “How much $$?” That’s it! That’s what they really want to know. Any compensation changes will probably take the form of items salary, stock, bonus, covered in an earlier post.

Feedback

In economic terms, the compensation change is the only ‘signal’ that matters here.

You’ve been giving feedback all year, right? Skip it this one time. If you waited a year to give feedback, you really screwed up, and you’ll make matters worse by giving someone a bonus and reminding them of things they could have done better at the same time.

Goals

It’s actually fantastic to pivot the conversation around the contributor’s goals. It’s a new year, she is thinking about that sort of thing.

Project Planning

No! This is a one on one, project planning needs to happen somewhere else.

Gawd knows what else

Managers, don’t confuse yourself. Give them their monetary feedback, pivot to their goals and start prepping for the next one on one.