Microsoft's abandonment of its so-called "stack ranking" method of evaluating employees should not come as a surprise, said an expert in human resources today.
"Forced ranking does appear to be out of favor," Kerry Chou, a senior practice leader with WorldatWork, an association of human resources professionals, said in an interview. "More organizations are ending the practice where you have to have, for example, 10% or 5% of all employees in the lowest-ranked category."
On Tuesday, Microsoft's head of human resources, Lisa Brummel, told employees that the firm was ditching its former method of ranking workers. Long called "stacked ranking" — but which Chou termed "forced ranking" — the management practice required team leaders to assign a set percentage of their members to five categories, including top and bottom rankings.
Rankings, as at most companies, were used to award promotions and bonuses, while those in the bottom-most category usually were pushed out of the firm, or left on their own accord.
By all accounts, the stacked ranking was widely disparaged by employees, and was blamed for Microsoft's cut-throat culture, which pitted workers and teams against one another. According to outside analysts, the competitive climate often limited or slowed Microsoft's inability to innovate, or even to keep pace with rivals like Google and Apple in areas such as search and tablets, as more energy was spent in-fighting with other teams or actively sabotaging their efforts, than in moving Microsoft forward.
One oft-cited example was Microsoft's decision to not sell an iPad-specific version of Office, a move many believed resulted from the Windows group overruling the Office team in the debate in order to boost its chances of meeting goals, and thus receiving bonuses and promotions.
This summer, CEO Steve Ballmer began to reorganize Microsoft, with one of its goals better collaboration among teams. At the time, Ballmer said that stacked ranking would remain.
But in an email to employees this week, Brummel said, "We are changing our performance review program to better align with the goals of our One Microsoft strategy," using Ballmer's label for the strategic pivot to device and services, and the ensuing reorganization. "This is a fundamentally new approach to performance and development designed to promote new levels of teamwork and agility for breakthrough business impact."
Forced ranking was never as popular in companies as many thought, said Chou. A recent survey conducted by WorldatWork, for example, pegged the practice to just 12% of American companies.
A much larger percentage of businesses — approximately 30% — used "forced distribution," in which companies either strongly urged managers, or required them, to put workers into category "buckets."
The terms "stacked ranking," "forced ranking" and "forced distribution" are often used interchangeably, said Chou, but the first two actually more properly refer to the practice of comparing all employees to all other employees, not just to those within each team.
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