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"Stack ranking system was harmful:" whoa! I didn't know Google practiced stack ranking. There is a lot of unnecessary stress generated at Microsoft due to this

"Stack ranking system was harmful:" whoa! I didn't know Google practiced stack ranking. There is a lot of unnecessary stress generated at Microsoft due to this[1]. I would have thought the Google folks would be wise enough to avoid it. As for ".... SVP response: “If you wanted to get promoted for these non-engineering tasks, move into management" heh! How big company ish is that? The best way to join Google these days seems to be as part of an acquired startup. Then you are at worst running out any vesting period while enjoying those free massages. [1] http://minimsft.blogspot.com/2005/07/microsoft-stack-ranking-is-not-good.html http://minimsft.blogspot.com/2005/07/microsoft-stack-ranking...

tptacek 16y ago
I had to look up "stack ranking" just now, so, for the benefit of the class: Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly. That just seems completely asinine.
- plinkplonk 16y ago
  "Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly. That just seems completely asinine." Worse, there is often an associated ideal distribution ("the curve") with fixed ratios for "exceeds expectations", "below expectations" and so on and managers are under pressure to conform. If you have an all superstar team, a certain number must still be in the bottom most bucket, and the bottommost 5-10 % is often let go or put on a watchlist (I am not saying this is how Google does it). Over a few years this gets very political as you can imagine. The (bad) middle managers love this part of their jobs.
  - kenjackson 16y ago
    It does seem asinine. Although frankly I can't think of many ways that seem much better. Do you always just give everyone on your team the exact same bonus?
    - tptacek 16y ago
      That's one option. Not giving bonuses at all is another option. Tying incentive comp to business events (recruitment, customer acquisition, an A/B test and minor feature change that produces a 1% uplift, etc) is another option. Anything has to be better than going out of your way to stratify an otherwise well-functioning team.
      - kenjackson 16y ago
        I just have a hard time believing incentives don't work. For example, if I lost all of my stock options today and was told I'd never get another raise or bonus, except CoL, I'd quit on the spot. In fact I'd argue, if there were no financial incentives, most HNers wouldn't do startups. I know everyone likes to say they do it to change the world and the passion of something or other. But in reality I've yet to see many founders take a $50k salary only (but keeping voting power) despite the profits of the company.
        tptacek 16y ago
        Incentives work great. Incentives aren't the problem. The basket of formal performance-driven compensation programs colloquially referred to as "incentive pay" are the problem. Incentive pay includes: * Formal periodic performance reviews * Scheduled bonuses based on "job performance" * Ranking of employees (this is the old GE performance management paradigm; "up or out!")
        rhizome 16y ago
        Losing all of your stock options or having something else taken away is not a negative case for incentives, it's an example of a disincentive, which also has an effect. They aren't the same thing, and you can tell because you don't know how well you'd be working if you never had the options in the first place (and hadn't been denied them or otherwise been treated unfairly). One of the reasons you don't see many founders take a $50k/yr salary is that very few of them are truly confident of success. I once heard an aphorism, "don't trust a founder who won't put their own money into the company." It's a little pointed and unrealistic, but you get the idea. In an industry driven by a mythology of becoming the next big thing (parallels to the equally one-in-a-million mindset in the music industry), no founder can afford, professionally and with regard to reputation, to treat themselves as anything but a foregone success, and that attitude requires "competitive compensation." This means they want to be paid as much as other unsure founders. The "low-salary superboss" is a product of already-successful companies.
  - codypo 16y ago
    Not only is it very political, but it forces some baffling decision making. Assume I have a team of 10 in which 5 are wonderful contributors, and that, due to stack ranking practices, only the top 1/3 of my team gets consideration for big bonuses and promotions. Here, I'm incentivized to immediately hire 5 warm bodies, thus ballooning my team to 15, so that the top 1/3 get the recognition they deserve. It's actually rational to do that if I'm concerned that those 5 excellent performers will leave without that recognition. The incentives that appear due to stack ranking are really, really bizarre.
    - InclinedPlane 16y ago
      Hiring is difficult and time consuming, what you really want is a re-org (which are all too frequent at big software dev. corporations).
  - ora600 16y ago
    I left my job at BigCo because I was part of a 8 person team where the manager was supposed to create a normal distribution out of scores from 1-5. I was one of two employees recognized for doing an excellent job, but my manager could rate just one of us as "excellent". During a performance review, my manager talked for an hour about how much I'm contributing and what an amazing job I do. Then he ranked me as average. I was extremely disappointed because I wanted the awesome job I do to get more official recognition. I started searching for a new job almost immediately and left shortly after. So yes, review systems considered harmful.
    - illumin8 16y ago
      This is actually how almost every large company works. Scale is 1 to 5, average is a 3, 2 is exceeds expectations, "Nobody ever gets a 1." The problem is that the grading is done on a curve, so that for every 2 given out, someone else must get a 4. If you get a 4, you are considered below expectations, and must be put on a "personal improvement plan," or managed out of the team. Because of this pressure, nobody wants to give out anything other than a 3. So they resort to stupid tricks like giving out "high 3s" or "low 3s" instead of 2s or 4s. The desire to model employee performance with data and manage out the bottom 10% has a crushing effect on the morale of any small technically focused team.
      - bmj 16y ago
        Even smaller companies can work this way. During last year's review, my manager (who is also a lead developer--heck, even the VP of engineering writes code on a weekly basis) told me that he wanted to score me higher, but some people frowned on such things because "people really can't be that good." It doesn't bother me much because our department is fairly sane in how they deal with reviews, and management in general.
        archangel_one 16y ago
        Agree. I work for a small company who occasionally like to act like a big company; we have a similar system which used to be hooked up to bonuses, but they eventually removed those. The explanation was pretty obtuse, but reading between the lines there were some employees getting bonuses even though they should objectively have been 4s or 5s on that scale - because of course everyone got 2 or 3 regardless.
  - orp 16y ago
    When I was a team leader, I was asked to rate my team members on a curve. Management stressed that this was important, and that we all had to conform. I told my boss I had no intention of destroying my team, and handed out ratings and reviews as they were deserved. Never heard this particular line from Management again.
  - shrikant 16y ago
    I was in a place that decided to give out bonuses to my team (consisting of 3 members and a leader) in the following way: 1. Allocate fixed amount to give out per team 2. Have team leader's manager determine how that pie would be shared between team leader and us 3 team members. 3. NOT have 360° feedback 4. Incorporate team leader feedback on team's performance into this decision I'm not sure what type of HR schmuck thought up that scheme. About a month after 'self evaluation', we were called into 1-1 meetings with the TL, who told us each separately how disappointing our performance had been, and the usual spiel about 'taking initiative' and 'stepping up' and 'moving to the next level'. Shortly after that we found out the three of us had received 0% each of the pie allotted to our team as a bonus. And the team leader had waltzed away with ALL of it. That's right: an allegedly disappointing team who'd failed to achieve any of its goals was compensated for by a super-human team leader who had somehow magically overcome all our shortcomings to over-achieve so much, that even the organisation-wide "curve" was left by the wayside to reward such awesomeness.
    - awakeasleep 16y ago
      It sounds like your manager actually suffered a bout of insanity or was a thief.
      - jonhendry 16y ago
        I'm guessing thief. It's where the incentives lead.
    - loewenskind 16y ago
      This kind of nonsense is why I became a consultant. I get my bonus every day now and I don't have to do any go through the "performance review theater" anymore. If they really have a problem with me then don't renew my contract. It's simple and honest, just how I like it.
- matwood 16y ago
  I once worked at company that employed a lot of hourly wage type people. One exec wanted to stack rank each group of wage employees each month and fire the bottom 25%. I tried to explain to him the negative morale effect that would lead to lower performance across the board, the fact any employes who were decent would just leave on their own, and there is a significant training cost for each new employee that he was ignoring. But nope, he wanted me to write the system anyway. Thankfully someone higher up with a bit of sense got wind of the plan and nixed it. It wasn't too much later that the original exec was canned.
  - rhizome 16y ago
    This is what Jack Welch did at GE in the 80s, firing 10% of management every year. It's not universally derided as an HR/Management policy. I mean, it's pretty much the entire premise of the TV show "The Apprentice," no? Pro: http://www.cogmap.com/blog/2009/11/12/force-ranking-to-fire-employees-every-year/ http://www.cogmap.com/blog/2009/11/12/force-ranking-to-fire-... Con: http://www.missionmindedmanagement.com/where-jack-welch-got-it-wrong-the-mandatory-annual-low-performer-cut http://www.missionmindedmanagement.com/where-jack-welch-got-...
    - paganel 16y ago
      I had a lot of respect for GE until not that long ago, but I think that after things like these (http://accounting.smartpros.com/x67325.xml http://accounting.smartpros.com/x67325.xml) we shouldn't take this company very seriously. They're just crooks like the rest of Wall Street.
    - VladRussian 16y ago
      >firing 10% of management every year that is completely different. All stack ranking mentioned so far was about employees. Firing 10% of management every year have real potential to improve morale.
    - jonnathanson 16y ago
      It bears mentioning that the long view of GE's history is becoming increasingly unkind to Jack Welch. He's starting to look pretty bad and short sighted in many respects. His legend has already been cemented, though, so I doubt anyone will care.
- BarkMore 16y ago
  Stack ranking means just that: the employees are ranked. What the company does with the ranking can vary. The uses of a stack rank can be beneficial or harmful. At one company where I worked, the rank was used to identify employees for promotion. If an employee consistently ranks above employees at a higher level, then the employee should probably be promoted. The company also merged the ranks for smaller groups into groups of one hundred or more. This resulted in more consistent reviews and promotions across the company. I consider these uses of stack rank to be beneficial. The company also did something harmful with the stack rank. The company graded on a curve and used the stack rank for the grading. Even if everybody in a pool is doing great work, somebody needs to be given a bad review.
  - jonnathanson 16y ago
    The problem with any sort of ranking sysyem is that skill sets, jobs, projects, and roles are not freely fungible or normalizable. You're forced to make some totally absurd comparisons for the sake of fitting whatever the mold may be. We're not talking apples to oranges here; we're talking apples to watermelons.
    - BarkMore 16y ago
      In the stack rank meetings that I was involved with, we ranked employees in the order that we would hire them to a new team. This ranking considered several things: productivity, ability to drive tasks to completion, quality of code, willingness to help others, personality and more. Although it was like comparing apples to oranges, there was usually a consensus on the ranking. A useful aspect of this ranking is that it's a different perspective from the written employee review. The review measured people against goals agreed to at the beginning of the review period. The stack ranking criteria considered more of a person's contribution. An employee could suck at meeting goals, but come out high in the stack ranking because of other things the employee did.
      - jonnathanson 16y ago
        I like the idea of a consensus assessment. Sometimes a person's value to the team is less quantifiable on paper than someone else's, but that doesn't mean it's intangible. It's usually quite tangible, and if everyone notices it (or the reverse), that's usually a good sign of the person's value-add. Not everyone is going to be the tireless codebot on the team, but that doesn't mean everyone isn't playing a critical role (Joel Spolsky obviously goes on at great lengths about this). Consensus-style reviews would probably arrive at a fair assessment of such value a lot more readily than individual writeups would. Also, a lot of people make critical contributions that just don't get noticed by the team lead because those contributions -- moral support, culture, taking time away from one's own work to assist others -- aren't boss-facing. But if you asked his or her peers, this person would get a stellar review. In situations like these, group feedback seems pretty important.
btilly 16y ago
There are many, many ways to set up a stack rank system. People that I know who have worked at both Microsoft and Google far prefer Google's system. That is not to say that they find Google's system perfect. Just significantly preferable to Microsoft's version. As a Google employee I am not at liberty to discuss what the differences are.
- sriramk 16y ago
  That's interesting. I'm guessing these are Microsoft employees who quit before the perf review system here at Microsoft was basically changed from scratch 3 years ago?
  - btilly 16y ago
    I've heard comments from people who were at Microsoft for a long time. I don't know the specific timelines of the people involved, and so can't tell you what time period their comments specifically referred to.
aaronbrethorst 16y ago
I was thinking the same thing ('oh man, i bet a Microsoftie could have created the same deck back in the mid/late 1990s...')
piaw 16y ago
The massages aren't free. They're subsidized at $20/hour.

tptacek 16y ago

I had to look up "stack ranking" just now, so, for the benefit of the class: Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly. That just seems completely asinine.

plinkplonk 16y ago
"Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly. That just seems completely asinine." Worse, there is often an associated ideal distribution ("the curve") with fixed ratios for "exceeds expectations", "below expectations" and so on and managers are under pressure to conform. If you have an all superstar team, a certain number must still be in the bottom most bucket, and the bottommost 5-10 % is often let go or put on a watchlist (I am not saying this is how Google does it). Over a few years this gets very political as you can imagine. The (bad) middle managers love this part of their jobs.
- kenjackson 16y ago
  It does seem asinine. Although frankly I can't think of many ways that seem much better. Do you always just give everyone on your team the exact same bonus?
  - tptacek 16y ago
    That's one option. Not giving bonuses at all is another option. Tying incentive comp to business events (recruitment, customer acquisition, an A/B test and minor feature change that produces a 1% uplift, etc) is another option. Anything has to be better than going out of your way to stratify an otherwise well-functioning team.
    - kenjackson 16y ago
      I just have a hard time believing incentives don't work. For example, if I lost all of my stock options today and was told I'd never get another raise or bonus, except CoL, I'd quit on the spot. In fact I'd argue, if there were no financial incentives, most HNers wouldn't do startups. I know everyone likes to say they do it to change the world and the passion of something or other. But in reality I've yet to see many founders take a $50k salary only (but keeping voting power) despite the profits of the company.
      - tptacek 16y ago
        Incentives work great. Incentives aren't the problem. The basket of formal performance-driven compensation programs colloquially referred to as "incentive pay" are the problem. Incentive pay includes: * Formal periodic performance reviews * Scheduled bonuses based on "job performance" * Ranking of employees (this is the old GE performance management paradigm; "up or out!")
      - rhizome 16y ago
        Losing all of your stock options or having something else taken away is not a negative case for incentives, it's an example of a disincentive, which also has an effect. They aren't the same thing, and you can tell because you don't know how well you'd be working if you never had the options in the first place (and hadn't been denied them or otherwise been treated unfairly). One of the reasons you don't see many founders take a $50k/yr salary is that very few of them are truly confident of success. I once heard an aphorism, "don't trust a founder who won't put their own money into the company." It's a little pointed and unrealistic, but you get the idea. In an industry driven by a mythology of becoming the next big thing (parallels to the equally one-in-a-million mindset in the music industry), no founder can afford, professionally and with regard to reputation, to treat themselves as anything but a foregone success, and that attitude requires "competitive compensation." This means they want to be paid as much as other unsure founders. The "low-salary superboss" is a product of already-successful companies.
- codypo 16y ago
  Not only is it very political, but it forces some baffling decision making. Assume I have a team of 10 in which 5 are wonderful contributors, and that, due to stack ranking practices, only the top 1/3 of my team gets consideration for big bonuses and promotions. Here, I'm incentivized to immediately hire 5 warm bodies, thus ballooning my team to 15, so that the top 1/3 get the recognition they deserve. It's actually rational to do that if I'm concerned that those 5 excellent performers will leave without that recognition. The incentives that appear due to stack ranking are really, really bizarre.
  - InclinedPlane 16y ago
    Hiring is difficult and time consuming, what you really want is a re-org (which are all too frequent at big software dev. corporations).
- ora600 16y ago
  I left my job at BigCo because I was part of a 8 person team where the manager was supposed to create a normal distribution out of scores from 1-5. I was one of two employees recognized for doing an excellent job, but my manager could rate just one of us as "excellent". During a performance review, my manager talked for an hour about how much I'm contributing and what an amazing job I do. Then he ranked me as average. I was extremely disappointed because I wanted the awesome job I do to get more official recognition. I started searching for a new job almost immediately and left shortly after. So yes, review systems considered harmful.
  - illumin8 16y ago
    This is actually how almost every large company works. Scale is 1 to 5, average is a 3, 2 is exceeds expectations, "Nobody ever gets a 1." The problem is that the grading is done on a curve, so that for every 2 given out, someone else must get a 4. If you get a 4, you are considered below expectations, and must be put on a "personal improvement plan," or managed out of the team. Because of this pressure, nobody wants to give out anything other than a 3. So they resort to stupid tricks like giving out "high 3s" or "low 3s" instead of 2s or 4s. The desire to model employee performance with data and manage out the bottom 10% has a crushing effect on the morale of any small technically focused team.
    - bmj 16y ago
      Even smaller companies can work this way. During last year's review, my manager (who is also a lead developer--heck, even the VP of engineering writes code on a weekly basis) told me that he wanted to score me higher, but some people frowned on such things because "people really can't be that good." It doesn't bother me much because our department is fairly sane in how they deal with reviews, and management in general.
      - archangel_one 16y ago
        Agree. I work for a small company who occasionally like to act like a big company; we have a similar system which used to be hooked up to bonuses, but they eventually removed those. The explanation was pretty obtuse, but reading between the lines there were some employees getting bonuses even though they should objectively have been 4s or 5s on that scale - because of course everyone got 2 or 3 regardless.
- orp 16y ago
  When I was a team leader, I was asked to rate my team members on a curve. Management stressed that this was important, and that we all had to conform. I told my boss I had no intention of destroying my team, and handed out ratings and reviews as they were deserved. Never heard this particular line from Management again.
- shrikant 16y ago
  I was in a place that decided to give out bonuses to my team (consisting of 3 members and a leader) in the following way: 1. Allocate fixed amount to give out per team 2. Have team leader's manager determine how that pie would be shared between team leader and us 3 team members. 3. NOT have 360° feedback 4. Incorporate team leader feedback on team's performance into this decision I'm not sure what type of HR schmuck thought up that scheme. About a month after 'self evaluation', we were called into 1-1 meetings with the TL, who told us each separately how disappointing our performance had been, and the usual spiel about 'taking initiative' and 'stepping up' and 'moving to the next level'. Shortly after that we found out the three of us had received 0% each of the pie allotted to our team as a bonus. And the team leader had waltzed away with ALL of it. That's right: an allegedly disappointing team who'd failed to achieve any of its goals was compensated for by a super-human team leader who had somehow magically overcome all our shortcomings to over-achieve so much, that even the organisation-wide "curve" was left by the wayside to reward such awesomeness.
  - awakeasleep 16y ago
    It sounds like your manager actually suffered a bout of insanity or was a thief.
    - jonhendry 16y ago
      I'm guessing thief. It's where the incentives lead.
  - loewenskind 16y ago
    This kind of nonsense is why I became a consultant. I get my bonus every day now and I don't have to do any go through the "performance review theater" anymore. If they really have a problem with me then don't renew my contract. It's simple and honest, just how I like it.
matwood 16y ago
I once worked at company that employed a lot of hourly wage type people. One exec wanted to stack rank each group of wage employees each month and fire the bottom 25%. I tried to explain to him the negative morale effect that would lead to lower performance across the board, the fact any employes who were decent would just leave on their own, and there is a significant training cost for each new employee that he was ignoring. But nope, he wanted me to write the system anyway. Thankfully someone higher up with a bit of sense got wind of the plan and nixed it. It wasn't too much later that the original exec was canned.
- rhizome 16y ago
  This is what Jack Welch did at GE in the 80s, firing 10% of management every year. It's not universally derided as an HR/Management policy. I mean, it's pretty much the entire premise of the TV show "The Apprentice," no? Pro: http://www.cogmap.com/blog/2009/11/12/force-ranking-to-fire-employees-every-year/ http://www.cogmap.com/blog/2009/11/12/force-ranking-to-fire-... Con: http://www.missionmindedmanagement.com/where-jack-welch-got-it-wrong-the-mandatory-annual-low-performer-cut http://www.missionmindedmanagement.com/where-jack-welch-got-...
  - paganel 16y ago
    I had a lot of respect for GE until not that long ago, but I think that after things like these (http://accounting.smartpros.com/x67325.xml http://accounting.smartpros.com/x67325.xml) we shouldn't take this company very seriously. They're just crooks like the rest of Wall Street.
  - VladRussian 16y ago
    >firing 10% of management every year that is completely different. All stack ranking mentioned so far was about employees. Firing 10% of management every year have real potential to improve morale.
  - jonnathanson 16y ago
    It bears mentioning that the long view of GE's history is becoming increasingly unkind to Jack Welch. He's starting to look pretty bad and short sighted in many respects. His legend has already been cemented, though, so I doubt anyone will care.
BarkMore 16y ago
Stack ranking means just that: the employees are ranked. What the company does with the ranking can vary. The uses of a stack rank can be beneficial or harmful. At one company where I worked, the rank was used to identify employees for promotion. If an employee consistently ranks above employees at a higher level, then the employee should probably be promoted. The company also merged the ranks for smaller groups into groups of one hundred or more. This resulted in more consistent reviews and promotions across the company. I consider these uses of stack rank to be beneficial. The company also did something harmful with the stack rank. The company graded on a curve and used the stack rank for the grading. Even if everybody in a pool is doing great work, somebody needs to be given a bad review.
- jonnathanson 16y ago
  The problem with any sort of ranking sysyem is that skill sets, jobs, projects, and roles are not freely fungible or normalizable. You're forced to make some totally absurd comparisons for the sake of fitting whatever the mold may be. We're not talking apples to oranges here; we're talking apples to watermelons.
  - BarkMore 16y ago
    In the stack rank meetings that I was involved with, we ranked employees in the order that we would hire them to a new team. This ranking considered several things: productivity, ability to drive tasks to completion, quality of code, willingness to help others, personality and more. Although it was like comparing apples to oranges, there was usually a consensus on the ranking. A useful aspect of this ranking is that it's a different perspective from the written employee review. The review measured people against goals agreed to at the beginning of the review period. The stack ranking criteria considered more of a person's contribution. An employee could suck at meeting goals, but come out high in the stack ranking because of other things the employee did.
    - jonnathanson 16y ago
      I like the idea of a consensus assessment. Sometimes a person's value to the team is less quantifiable on paper than someone else's, but that doesn't mean it's intangible. It's usually quite tangible, and if everyone notices it (or the reverse), that's usually a good sign of the person's value-add. Not everyone is going to be the tireless codebot on the team, but that doesn't mean everyone isn't playing a critical role (Joel Spolsky obviously goes on at great lengths about this). Consensus-style reviews would probably arrive at a fair assessment of such value a lot more readily than individual writeups would. Also, a lot of people make critical contributions that just don't get noticed by the team lead because those contributions -- moral support, culture, taking time away from one's own work to assist others -- aren't boss-facing. But if you asked his or her peers, this person would get a stellar review. In situations like these, group feedback seems pretty important.

btilly 16y ago

There are many, many ways to set up a stack rank system. People that I know who have worked at both Microsoft and Google far prefer Google's system. That is not to say that they find Google's system perfect. Just significantly preferable to Microsoft's version. As a Google employee I am not at liberty to discuss what the differences are.

sriramk 16y ago
That's interesting. I'm guessing these are Microsoft employees who quit before the perf review system here at Microsoft was basically changed from scratch 3 years ago?
- btilly 16y ago
  I've heard comments from people who were at Microsoft for a long time. I don't know the specific timelines of the people involved, and so can't tell you what time period their comments specifically referred to.

aaronbrethorst 16y ago

I was thinking the same thing ('oh man, i bet a Microsoftie could have created the same deck back in the mid/late 1990s...')

piaw 16y ago

The massages aren't free. They're subsidized at $20/hour.