7 ms·

There are a lot of good ideas in here, but stack-ranking is a terrible one. First, it makes people hate each other. Anyone who comes up in the bottom half is g

There are a lot of good ideas in here, but stack-ranking is a terrible one. First, it makes people hate each other. Anyone who comes up in the bottom half is going to be looking immediately to move to another group simply because he ended up in the bottom half. And if someone ends up near the bottom and ends up with no bonus or on a PIP, he's going to be spending the next few months trying to figure out who screwed him, which creates this whole side game that has nothing to do with actual work. Second, it encourages people to work on the projects that are most visible, which are not always the most valuable. Third, it creates a general atmosphere of distrust. People are constantly watching their back for others who might screw them in the peer review process. This is an outsider's view and a microgripe, and I think a lot of the ideas in that book are good ones. I just saw the words "stack ranking" and knew I had to speak up. It's seriously not a good idea. If someone's going to get whacked, it should happen for a real reason, and not because that person ended up in the bottom 15% because only a couple people knew what he was working on. Maybe he was working on something important but unglamorous. I've seen that kind of shit happen all the time with stack-ranking systems.

v21 15y ago
They do mention it's only used for deciding salary adjustments. But generally, good points. What would you do instead?
- michaelochurch 15y ago
  Well, I don't think hierarchy is prima facie evil. Conceptual hierarchy is how people think. The problem with human organizations (and "managers" and the bad rap they get) is that hierarchies are easy to corrupt by aiming at the top, and that they usually promote the wrong people-- social climbers instead of leaders. Managers get a bad rap, but good managers (possibly 10-20%) are worth their weight in gold. Bad managers are disastrous. No managers is rarely an option. "Flat" organizations tend to devolve into young-wolf conflicts and evolve their own unofficial hierarchies. In fact, young wolves are more dangerous than managers; because young wolves' positions of influence are unofficial and therefore unsafe, those around them are direct competitors and they have more incentive to attack. Managers rarely sabotage their own reports, because they have the safety of being a level or two higher. Young wolves frequently do this to people who are technically same-level but haven't been around as long or had as much of an opportunity to establish themselves, but whom they perceive as long-term threats. If nothing else, you need good managers in place to prevent young-wolf conflicts. The problem with traditional management, though, is that people promotions are pull-based (i.e. people get promoted by conning the top guys) rather than push-driven from below. The result is that people get promoted based on social climbing rather than real leadership, and managerial incompetence sets in very quickly. I'd get rid of "performance" reviews. The word is loaded, and most workplace conflicts have nothing to do with performance. I've worked in elite companies, so this observation may be unusual, but I've seen maybe 20 people get fired in my career, and only one was for performance. The others were personality conflicts or other reasons. Dressing these issues up as "performance" issues just makes everyone angry. Instead of reviewing "performance", which is code for "dressing up how I like you as something more objective", there should be a review along two axes: Skill and Impact, which are much more objective. I came up with a half-decent (IMO) scale for assessing software engineering skill here: http://michaelochurch.wordpress.com/2012/01/26/the-trajectory-of-a-software-engineer-and-where-it-all-goes-wrong/ http://michaelochurch.wordpress.com/2012/01/26/the-trajector... . The difference between 1.5 and 1.6 may be hard to assess, but that between a 1.5 and 1.8 is pretty much objectively visible. Here's the kicker: these numbers are public. It shouldn't be "sensitive". Management ought to have the balls to say, "we think this person has Skill 1.7 and Impact 1.8 and here's why." What is kept private are reviews more than 12 months old, so that peoples' trends aren't visible for everyone to see. The other thing that deserves to be private (because it is somewhat sensitive) is assessment of a person's potential, but that's not what formal reviews are for. That should be handled informally, in any case. Ok, now as for how the reviews occur... as I said, the problem with traditional management is that selection occurs on a "pull" rather than "push" basis. So instead of people having "managers", they choose sponsors who are typically more senior (although at the very top levels where "more senior" is hard to find, peers will do). Sponsors keep track of their reports' growth and advocate for them during the review process. The difference is that a sponsor relationship can be terminated at any time, by either side, without requiring anyone to exit the company, and that an employee can (and should) have 2-3 sponsors. This system allows people to "vote with their feet". If someone's not a good sponsor, people move away from him. What happens if someone has no sponsor? If you have no sponsor, you go before upper management yourself during review time. You advocate for yourself. If you can effectively communicate what you have done and what you will do, then you may advance. If you can't, you'll stagnate. (The purpose of the sponsor is to be an intermediate advocate with a better understanding of what the company and its management value, but there's no reason a person can't be allowed to advocate for himself.) Of course, if someone can't get a sponsor for a period of months, that's a sign that this person might need to leave.
  - lhnz 15y ago
    Does a young wolf always create conflict? For example, it is possible to avoid conflict and form a lot of influence by playing kingmaker. You do not need to sabotage others of similar technical abilities to you by attacking them directly, you can instead heavily exert yourself in producing massive value to their competitors. This is more stable as it's without conflict. It is the silent death to those that compete with you individually, and a way of finding allies. Is that a young wolf, a social climber or a sponsor?
    - Duff 15y ago
      That's the way that things work in many political organizations like party committees.If you have the power to create kings, you have the power to destroy a king. The key to any of this "flat organization" stuff is to keep the organization small enough that you can either keep out nasty personalities, or prevent them from burrowing into the org.
  - yummyfajitas 15y ago
    It's also worth noting that heirarchy, at least in principle, is a very efficient method of communication. A true peer-to-peer system of n people has a communications graph which is a K_n (complete graph on n nodes). Each node must monitor communications from n people, and there are O(n^2) edges. That can't scale. But for small n it isn't bad - the distance between two nodes is 1. A tree has n-1 edges, and most nodes only need to communicate with 3 other nodes. The distance between 2 nodes is log(n) so communication costs aren't disastrous. We love trees in computer science, the only reason we don't love them in management is because our personal experience leads us to compare O(1) communication costs (in a K_n) with log(n) communication costs (in a tree).
    - Drbble 15y ago
      There are efficient network structures that are not hierarchical and are not trees. Trees have horrible single point of failure characteristics, where one bad node kills an entire branch.
officemonkey 15y ago
As long as stack-ranking is only done to adjust compensation, I don't really see the problem. As a more traditional manager, I have to consider salary adjustments for my employees. What Valve seems to be doing is to let everyone consider salary adjustments for (half) of the team. And since the rankings appear to be averaged out, one vindictive co-worker isn't likely to screw you over. >it creates a general atmosphere of distrust. Alternately, it creates a culture of responsibility. You want to do well in stack-ranking, so you're going to do your best work. Finally, 50% of any group are below average. I honestly wouldn't mind being considered "the dumbest guy in the room" if I got to work at a dream company. See the following quote from Moby Dick: >And there is a Catskill eagle in some souls that can alike dive down into the blackest gorges, and soar out of them again and become invisible in the sunny spaces. And even if he for ever flies within the gorge, that gorge is in the mountains; so that even in his lowest swoop the mountain eagle is still higher than other birds upon the plain, even though they soar.
- michaelochurch 15y ago
  If it's only used for compensation, I agree that it's not such a big deal. Getting a 10% year-end bonus instead of 20% is not exactly "getting screwed". The only large (200+) private-sector company where I've worked is Google, where their stack-ranking/Perf system had some serious problems. The first was a 5% cut-line. If you were in the bottom 5% of the Perf stack, you ended up on a PIP. Who usually ends up here? Some were objective underperformers, who'd been coasting for years, in some cases running at less than 1 CL per month. Most, on the other hand, were junior people on underperforming teams-- and of course, those junior people had the least to do with that team's underperformance, but they were poorly established so they got the shaft. That's how most layoffs actually work: junior people who landed on the least effective teams. It's not atypical, but it's dysfunctional. By the way, PIPs have nothing to do with "improving performance". They exist to make it easy to fire people without severance. I actually think PIPs are imbecilic, because I'd rather cut a 3-month severance check and separate cleanly than keep a fired employee in the office for 1 month, but that's another rant. PIPs make the finance department happy (look at what we saved on severance payments!) but piss all over morale and make the manager's life hell, to say nothing about what they do for the PIP'd employee. At Google, a PIP is effectively permanent. Even if you pass the PIP, you become damaged goods and can't transfer. It sticks around on your permanent record until you leave. Which brings discussion to the second problem with Google's system. It sticks around forever. When these types of systems get rotten is when they start getting in the way of peoples' transfers. It means that the people who really should be moving to other projects can't get on to them because no one wants to take a chance on that guy who was an "objective underperformer" in Q4 2005. So, to come around to your point, I agree that if the rankings are only used to adjust pay, there's not much harm done. Unfortunately, it's rare that data collected is only used for the stated purpose. If these numbers start damaging peoples' ability to choose their own projects, it can become nasty quickly.
matwood 15y ago
Stack ranking comes out of a couple ideas. One is that it's important to always be bringing on new people with a fresh perspective. If no one is leaving the company it's hard to do that effectively, although normal attrition can usually take care of this. Two, it's management admitting that they have hired the wrong people at some point and have dead weight. Of course management never wants to say they screwed up, but if every hire was a perfect hire then there were be little reason to try and remove people. The problem is that stack ranking on an individual level puts the employee focus on themselves instead of the team and the company. All employees should be focused on doing what's best for the company as a whole and not what's best for themselves. Stack ranking sets up the exact opposite situation. If there are poor employees on the team then speak with them, put them on corrective action, etc... If you already have a team of great performers, ranking them will only work to align their goals differently from the company and that can lead to all sorts of problems.
- michaelochurch 15y ago
  To be fair to Valve, it sounds like you're talking about rank-and-yank, which is not necessarily the same thing as stack-ranking. I made the same mistake in my response: assuming that stack-ranking meant that those who come up in the bottom get PIP'd or fired. That's not strictly true. However, most stack-ranking systems end up as de facto rank-and-yank. Objective, across-the-board incompetents are very rare. Generally, companies that are well run are going to have very few people (at lower levels) who actually should be fired. Oddly, the levels at which firing 10-30% of people make sense are the managerial levels where people almost never get fired (and if they do, they get huge severance packages that include outplacement assistance). Most hiring mistakes are bad matching, not bad hiring. The right person was brought on and put in the wrong place. So the correct solution is to pivot: help the person find a transfer to a more appropriate team. In very small companies, this may not be an option. If there's only 1 project, and you hire someone who's a bad fit for it, you have to fire him, because there's nowhere else to put him. But companies at that size generally don't have HR departments or company-wide stack-ranking.
  - lawnchair_larry 15y ago
hammock 15y ago
Seems to me that ranking employees commoditizes them. How can you say one employee is better than another if they perform completely different roles? Then again, we are probably talking about programmers/devs in this thread, who are used to being commoditized. That is not a good thing.
isamuel 15y ago
It's not a complete answer to your critique, and I don't have any experience working with stack-ranking, so I'm not sure the following is true. But: it seems like the worst problems of stack ranking might come from not having good people doing the ranking. In other words, it's a system that would be a complete disaster if used in a normal organization full of normal people. But Valve strives to be (and, I think it may be fairly said, is) neither. True?
- Tloewald 15y ago
  Back in my days at Andersen Consulting, annual reviews were done by getting everyone at manager or higher level to assess everyone they had worked with over the preceding year and the nature and duration of the working relationship. This weighted your ranking. Within seniority levels, every person's scores were then calculated, sorted, and then assigned to one of five bands which determined raises. This sounds a lot like stack ranking except it was top down. This was, by far, the best system I have ever seen for handling a difficult and often unpleasant process, and I think making it work across levels versus top down would only improve it. Incidentally, I only found out about this process once I made manager -- but I had consistently been in the top band for my entire time at AC despite having a senior colleague trying to screw me.

v21 15y ago

They do mention it's only used for deciding salary adjustments. But generally, good points. What would you do instead?

michaelochurch 15y ago
Well, I don't think hierarchy is prima facie evil. Conceptual hierarchy is how people think. The problem with human organizations (and "managers" and the bad rap they get) is that hierarchies are easy to corrupt by aiming at the top, and that they usually promote the wrong people-- social climbers instead of leaders. Managers get a bad rap, but good managers (possibly 10-20%) are worth their weight in gold. Bad managers are disastrous. No managers is rarely an option. "Flat" organizations tend to devolve into young-wolf conflicts and evolve their own unofficial hierarchies. In fact, young wolves are more dangerous than managers; because young wolves' positions of influence are unofficial and therefore unsafe, those around them are direct competitors and they have more incentive to attack. Managers rarely sabotage their own reports, because they have the safety of being a level or two higher. Young wolves frequently do this to people who are technically same-level but haven't been around as long or had as much of an opportunity to establish themselves, but whom they perceive as long-term threats. If nothing else, you need good managers in place to prevent young-wolf conflicts. The problem with traditional management, though, is that people promotions are pull-based (i.e. people get promoted by conning the top guys) rather than push-driven from below. The result is that people get promoted based on social climbing rather than real leadership, and managerial incompetence sets in very quickly. I'd get rid of "performance" reviews. The word is loaded, and most workplace conflicts have nothing to do with performance. I've worked in elite companies, so this observation may be unusual, but I've seen maybe 20 people get fired in my career, and only one was for performance. The others were personality conflicts or other reasons. Dressing these issues up as "performance" issues just makes everyone angry. Instead of reviewing "performance", which is code for "dressing up how I like you as something more objective", there should be a review along two axes: Skill and Impact, which are much more objective. I came up with a half-decent (IMO) scale for assessing software engineering skill here: http://michaelochurch.wordpress.com/2012/01/26/the-trajectory-of-a-software-engineer-and-where-it-all-goes-wrong/ http://michaelochurch.wordpress.com/2012/01/26/the-trajector... . The difference between 1.5 and 1.6 may be hard to assess, but that between a 1.5 and 1.8 is pretty much objectively visible. Here's the kicker: these numbers are public. It shouldn't be "sensitive". Management ought to have the balls to say, "we think this person has Skill 1.7 and Impact 1.8 and here's why." What is kept private are reviews more than 12 months old, so that peoples' trends aren't visible for everyone to see. The other thing that deserves to be private (because it is somewhat sensitive) is assessment of a person's potential, but that's not what formal reviews are for. That should be handled informally, in any case. Ok, now as for how the reviews occur... as I said, the problem with traditional management is that selection occurs on a "pull" rather than "push" basis. So instead of people having "managers", they choose sponsors who are typically more senior (although at the very top levels where "more senior" is hard to find, peers will do). Sponsors keep track of their reports' growth and advocate for them during the review process. The difference is that a sponsor relationship can be terminated at any time, by either side, without requiring anyone to exit the company, and that an employee can (and should) have 2-3 sponsors. This system allows people to "vote with their feet". If someone's not a good sponsor, people move away from him. What happens if someone has no sponsor? If you have no sponsor, you go before upper management yourself during review time. You advocate for yourself. If you can effectively communicate what you have done and what you will do, then you may advance. If you can't, you'll stagnate. (The purpose of the sponsor is to be an intermediate advocate with a better understanding of what the company and its management value, but there's no reason a person can't be allowed to advocate for himself.) Of course, if someone can't get a sponsor for a period of months, that's a sign that this person might need to leave.
- lhnz 15y ago
  Does a young wolf always create conflict? For example, it is possible to avoid conflict and form a lot of influence by playing kingmaker. You do not need to sabotage others of similar technical abilities to you by attacking them directly, you can instead heavily exert yourself in producing massive value to their competitors. This is more stable as it's without conflict. It is the silent death to those that compete with you individually, and a way of finding allies. Is that a young wolf, a social climber or a sponsor?
  - Duff 15y ago
    That's the way that things work in many political organizations like party committees.If you have the power to create kings, you have the power to destroy a king. The key to any of this "flat organization" stuff is to keep the organization small enough that you can either keep out nasty personalities, or prevent them from burrowing into the org.
- yummyfajitas 15y ago
  It's also worth noting that heirarchy, at least in principle, is a very efficient method of communication. A true peer-to-peer system of n people has a communications graph which is a K_n (complete graph on n nodes). Each node must monitor communications from n people, and there are O(n^2) edges. That can't scale. But for small n it isn't bad - the distance between two nodes is 1. A tree has n-1 edges, and most nodes only need to communicate with 3 other nodes. The distance between 2 nodes is log(n) so communication costs aren't disastrous. We love trees in computer science, the only reason we don't love them in management is because our personal experience leads us to compare O(1) communication costs (in a K_n) with log(n) communication costs (in a tree).
  - Drbble 15y ago
    There are efficient network structures that are not hierarchical and are not trees. Trees have horrible single point of failure characteristics, where one bad node kills an entire branch.

officemonkey 15y ago

As long as stack-ranking is only done to adjust compensation, I don't really see the problem. As a more traditional manager, I have to consider salary adjustments for my employees. What Valve seems to be doing is to let everyone consider salary adjustments for (half) of the team. And since the rankings appear to be averaged out, one vindictive co-worker isn't likely to screw you over. >it creates a general atmosphere of distrust. Alternately, it creates a culture of responsibility. You want to do well in stack-ranking, so you're going to do your best work. Finally, 50% of any group are below average. I honestly wouldn't mind being considered "the dumbest guy in the room" if I got to work at a dream company. See the following quote from Moby Dick: >And there is a Catskill eagle in some souls that can alike dive down into the blackest gorges, and soar out of them again and become invisible in the sunny spaces. And even if he for ever flies within the gorge, that gorge is in the mountains; so that even in his lowest swoop the mountain eagle is still higher than other birds upon the plain, even though they soar.

michaelochurch 15y ago
If it's only used for compensation, I agree that it's not such a big deal. Getting a 10% year-end bonus instead of 20% is not exactly "getting screwed". The only large (200+) private-sector company where I've worked is Google, where their stack-ranking/Perf system had some serious problems. The first was a 5% cut-line. If you were in the bottom 5% of the Perf stack, you ended up on a PIP. Who usually ends up here? Some were objective underperformers, who'd been coasting for years, in some cases running at less than 1 CL per month. Most, on the other hand, were junior people on underperforming teams-- and of course, those junior people had the least to do with that team's underperformance, but they were poorly established so they got the shaft. That's how most layoffs actually work: junior people who landed on the least effective teams. It's not atypical, but it's dysfunctional. By the way, PIPs have nothing to do with "improving performance". They exist to make it easy to fire people without severance. I actually think PIPs are imbecilic, because I'd rather cut a 3-month severance check and separate cleanly than keep a fired employee in the office for 1 month, but that's another rant. PIPs make the finance department happy (look at what we saved on severance payments!) but piss all over morale and make the manager's life hell, to say nothing about what they do for the PIP'd employee. At Google, a PIP is effectively permanent. Even if you pass the PIP, you become damaged goods and can't transfer. It sticks around on your permanent record until you leave. Which brings discussion to the second problem with Google's system. It sticks around forever. When these types of systems get rotten is when they start getting in the way of peoples' transfers. It means that the people who really should be moving to other projects can't get on to them because no one wants to take a chance on that guy who was an "objective underperformer" in Q4 2005. So, to come around to your point, I agree that if the rankings are only used to adjust pay, there's not much harm done. Unfortunately, it's rare that data collected is only used for the stated purpose. If these numbers start damaging peoples' ability to choose their own projects, it can become nasty quickly.

matwood 15y ago

Stack ranking comes out of a couple ideas. One is that it's important to always be bringing on new people with a fresh perspective. If no one is leaving the company it's hard to do that effectively, although normal attrition can usually take care of this. Two, it's management admitting that they have hired the wrong people at some point and have dead weight. Of course management never wants to say they screwed up, but if every hire was a perfect hire then there were be little reason to try and remove people. The problem is that stack ranking on an individual level puts the employee focus on themselves instead of the team and the company. All employees should be focused on doing what's best for the company as a whole and not what's best for themselves. Stack ranking sets up the exact opposite situation. If there are poor employees on the team then speak with them, put them on corrective action, etc... If you already have a team of great performers, ranking them will only work to align their goals differently from the company and that can lead to all sorts of problems.

michaelochurch 15y ago
To be fair to Valve, it sounds like you're talking about rank-and-yank, which is not necessarily the same thing as stack-ranking. I made the same mistake in my response: assuming that stack-ranking meant that those who come up in the bottom get PIP'd or fired. That's not strictly true. However, most stack-ranking systems end up as de facto rank-and-yank. Objective, across-the-board incompetents are very rare. Generally, companies that are well run are going to have very few people (at lower levels) who actually should be fired. Oddly, the levels at which firing 10-30% of people make sense are the managerial levels where people almost never get fired (and if they do, they get huge severance packages that include outplacement assistance). Most hiring mistakes are bad matching, not bad hiring. The right person was brought on and put in the wrong place. So the correct solution is to pivot: help the person find a transfer to a more appropriate team. In very small companies, this may not be an option. If there's only 1 project, and you hire someone who's a bad fit for it, you have to fire him, because there's nowhere else to put him. But companies at that size generally don't have HR departments or company-wide stack-ranking.
- lawnchair_larry 15y ago

hammock 15y ago

Seems to me that ranking employees commoditizes them. How can you say one employee is better than another if they perform completely different roles? Then again, we are probably talking about programmers/devs in this thread, who are used to being commoditized. That is not a good thing.

isamuel 15y ago

It's not a complete answer to your critique, and I don't have any experience working with stack-ranking, so I'm not sure the following is true. But: it seems like the worst problems of stack ranking might come from not having good people doing the ranking. In other words, it's a system that would be a complete disaster if used in a normal organization full of normal people. But Valve strives to be (and, I think it may be fairly said, is) neither. True?

Tloewald 15y ago
Back in my days at Andersen Consulting, annual reviews were done by getting everyone at manager or higher level to assess everyone they had worked with over the preceding year and the nature and duration of the working relationship. This weighted your ranking. Within seniority levels, every person's scores were then calculated, sorted, and then assigned to one of five bands which determined raises. This sounds a lot like stack ranking except it was top down. This was, by far, the best system I have ever seen for handling a difficult and often unpleasant process, and I think making it work across levels versus top down would only improve it. Incidentally, I only found out about this process once I made manager -- but I had consistently been in the top band for my entire time at AC despite having a senior colleague trying to screw me.