17 ms·

The Poisonous Employee-Ranking System That Helps Explain Microsoft’s Decline

• fatjokes 13y ago
  Does Google do this as well?
  • pmb 13y ago
    It does put people in buckets, but places no restrictions on the quantities that must reside in each bucket.
    • fatjokes 13y ago
      Sensible.
• ChristianMarks 13y ago
  I think everybody wants to work in a high-performance culture where we reward people who are doing fantastic work... This is typical superficial business talk about "culture." Dig what the humanists have to say about it: http://www.fastcolabs.com/3016238/why-your-startups-culture-is-secretly-awful http://www.fastcolabs.com/3016238/why-your-startups-culture-...
• jcheng 13y ago
  I only worked there for about 3.5 years starting in 2006, but from my perspective, dead wood was a bigger problem than the stack rank, and the stack rank was the main force keeping dead wood from being an even bigger problem. Are there better mechanisms to systematically force managers to make the tough calls to let people go or counsel them out?
  • kqr2 13y ago
    There is the Cravath Sytem's "Up or Out" policy: http://en.wikipedia.org/wiki/Up_or_out http://en.wikipedia.org/wiki/Up_or_out In a hierarchical organization, "up or out" is the requirement that each member of the organization must achieve a certain rank within a certain period of time. If they fail to do so, they must leave the organization.
    • HarryHirsch 13y ago
      It's one of those things that work well only in certain circumstances. Most especially a continuous stream of applicants, some of them above average, is needed. At my not-particularly-good university they keep hiring faculty at assistant professor rank. Since the graduate school isn't impressive the applicant quality and publication record isn't great, and someone getting a grant is a rarity. After five years they won't get tenure, the position is re-advertised, more startup money is spent, wash, rinse, repeat. Under these circumstances it would be wiser for them not to shoot for the star performers they won't ever get. The research quality will be just as mediocre, but they can spare themselves the hiring process and save on startup funds.
    • RyanMcGreal 13y ago
      Sounds awful. I work as a programmer, but the only way up at my employer is into management, where I would necessarily have to stop working as a programmer. That would be a step away from what I enjoy doing.
      • rictic 13y ago
        A healthy engineering company should have high level positions that are still engineering positions.
        • eitally 13y ago
          The challenge for corporations is to figure out how to keep senior technical staff in technical roles when they legitimately have worked their way into a product ownership role (this is for non-consumer-product companies with dev teams of only a few people) and there may not be a personal with people-manager skills who has the business knowledge to do that part for them.
    • sitharus 13y ago
      That would be very difficult in a software development role. You'd either end up out of dev and in management or you'd have to leave. Everywhere I've worked there's only a few levels where you actually code - right now we have graduate, dev, and senior dev. You'd end up moving your best people to a level where you can't use their skills any more.
  • progn 13y ago
    The stack rank is the _reason_ there's so much dead wood: managers have to keep mediocre performers on the payroll so that star performers don't get bad reviews and leave. You need star performance to get anything done, since Microsoft is not somehow exempt from the power-law distribution of programmer productivity. The accumulation of mediocre performers makes the organization "trust sparse" (the average employee is a low-net-value robot who exists only to absorb the bad reviews in place of the few who get stuff done), which seriously damages long-distance collaboration, since you can't tell in advance which employees are the bozos. The review system also creates a culture of extreme risk avoidance, as you can't trust the bozos you have on your team to actually code features properly, but you still have to give them work.
    • deleted 13y ago
      [deleted]
    • keithpeter 13y ago
      End user comment: I interact with the products of this system every day. I shall never look at Microsoft Office or Outlook in the same way again!
  • RougeFemme 13y ago
    I can see how it would be a good way to rid the company of dead wood, but depending on the employees are grouped, it can work very poorly. When it was first implemented in an organization I used to work for, group A already had almost all dead wood (when compared with the overall company) and group B had almost all stellar employees (when compared with the overall company). Some of group A will ended up "at or above the curve" for their group, while some of group B ended up "below the curve" for their. So some of group B got bonuses while some in group A ended up on "performance improvement plans". Poor implementation? I assume so. But it was painful and infuriating to watch. I was in group A and did not end up on a performance improvement plan, thankfully. But my blood still boiled - for myself AND my co-workers.
    • eterm 13y ago
      You may wish to edit your group A and B descriptions unless you meant you were dead-wood! This sounds terrible either way, but why did one group end up significantly worse?
• semisight 13y ago
  I can't imagine working in an environment like this. If the core idea is that all employees fall on a bell curve in their overall value, what about small sample sizes? In what dimension do you measure them--what is "performance" even? And to do this every six months? Is there something I'm not seeing here? How is this still considered a viable management strategy?
  • mgkimsal 13y ago
    Nobody ever got fired for aping Jack Welch...
    • hga 13y ago
      To the extent this was responsible for his early departure from Microsoft, it didn't work out in the end. The article also says GE dropped this after Welch left.
• ballard 13y ago
  The most obvious question: Does Microsoft annually fire the X% lowest "performing" as some other shops do? But more importantly, there are much bigger problems at Microsoft than gaming performance reviews: product strategy, how people are treated and relations between divisions. MSFT may need to let go of some legacy in order to move forward faster. (Risk enterprise customer hate, but whatevs.)
  • smm2000 13y ago
    Nope, it's very difficult to get fired from Microsoft unless you try really hard. Answering emails and doing minimum amount of coding (1 hour/day) is enough in most groups to get average reviews.
    • einhverfr 13y ago
      I had a friend at Microsoft when I was there who tried to get a URL spoofing vulnerability fixed by the IE team and when that failed used it to hack their hotmail accounts. He almost got fired over that one. I knew one person who did get fired. The thing though was that the firing occurred at a time when they were trying to push for higher attrition during a move of a unit overseas so not sure how much I can read into it.
    • city41 13y ago
      Hmm, I had a different experience during my 3 years at MS. On my team, people definitely got fired. Having worked at companies where getting fired is unheard of, I really appreciated that the deadwood got shown the door. Although I must admit my experience at MS really does not match up with a lot of what I'm reading in this thread. I suspect my team was quite an outlier.
    • akurilin 13y ago
      Knew an SDE II with 10 years of experience at MS who didn't know how to grep through a file to find out which log lines started with a certain word. Guy seemed have been holding pretty well onto his job, probably senior by now. Plenty of deadwood.
• asenna 13y ago
  I just can't believe how or why they are continuing with the system when it is clear this is counter-productive and is hurting the company in many ways. What possible reason can there be? There is no way I would ever want to work in that kind of an environment. Is there another side of the story? Can someone from Microsoft shed more light on this?
  • nc4n8gh2k 13y ago
    Before I agreed to work at Microsoft I asked the HR people about it. They felt this was a great system because a company with ~100K employees was bound to fit a bell curve regardless of its ability to hire and retain "the best". They told me the five buckets only had to meet their expected quotas at the level of Steve Ballmer, so it absolutely was not a zero-sum game as some had alleged. I haven't seen a full year cycle applied to myself, but the one period I did participate in didn't quite work that way in practice. In reality, the zero-sum gets enforced much lower in the company than Ballmer himself. Exactly where probably depends a lot on what division and team it is. Neither have I seen evidence of the claimed worst effects of this type of system. Instead I saw great people take a hit for the team, rather than retaining underperformers for this purpose. Who knows, maybe in some ways this is just as bad. Every big organization needs some kind of system and there are certainly worse ones. This system is effective in allowing the company to promote some people, keep some where they are, and move some out. But it would be nice if the current shuffling at the top became an opportunity to bring in something better.
    • kabdib 13y ago
      The recruiters did indeed lie to you about the size of the buckets and how far up they went. They say they try to keep things statistically significant, but the number of people in my band was pretty low, and it was clear that some good people were going to get screwed. Something is wrong when you are shafting great people in one part of the company while promoting knuckle-draggers in another. Part of Ballmer/Brummel's trouble is that they couldn't seem to recognize who was honestly contributing versus who was parasite, or an under-performer, or someone toxic who was pushing out good people to serve their personal gain.
    • 13y ago
• qq66 13y ago
  Well, one more blog post about the "ONE THING THAT KILLED MICROSOFT." Nothing killed Microsoft. It just exhibited mean regression, as everything eventually does. It found itself on the very top of a mountain in an industry where you have to keep climbing to stay still. The same thing happened to Apple -- it had an unprecendented string of hits with iPod/iPhone/iPad and it took competitors a few years to catch up. Sometimes, a basketball player will make ten straight baskets. He'll seem invincible, then he'll make another and the crowd will go wild. But if he's a 60% shooter, at some point he'll miss a basket, and another, and another, and descend back into reality. That's just how the world is.
  • sillysaurus2 13y ago
    Well, if he's a 60% shooter, then he has a 60% chance of making each shot. If he makes 10 in a row, then he's still 60% likely to make each of the next 3. Your argument seems to be that everything is doomed to fail, but there's no reason why that should be true within a single generation of people.
    • qq66 13y ago
      What I'm saying is that the ten consecutive baskets make the spectators in the bleachers temporarily forget that they are watching a 60% shooter. Each consecutive basket takes them further and further into the delusion that what they are seeing is not random. And when the eleventh shot misses the basket, the jarring reintroduction of reality sends them looking for a reason "Why?" when the only real answer is "because."
      • 6d0debc071 13y ago
        The more baskets he gets the more likely it is that it's not random. The chance of him shooting a single basket, if he's predicted to get them 60% of the time and you have evidence justifying that confidence level, is .6 The chance of him shooting two such baskets in a row is 0.36 The chance of him shooting 13 such baskets in a row is 0.0013 It seems unfair to suggest that crowd are behaving irrationally when dealing with such a distribution. In probability you compare against other probabilities to determine what's most rational to believe. So - what's more likely: A cumulative probability that will occur very rarely? or That he's cheating? The more shots he makes the more likely that explanation becomes by comparison.... If people cheat more commonly than the odds of that distribution of shots would happen by chance....
• sprague 13y ago
  Note that at Microsoft, a good manager (i.e. somebody who takes care of his/her people) will spend far more on the stack rank process than on, say, product strategy.
  • kabdib 13y ago
    Well, you have managers who are good at both. You want that kind. But in the absence of any kind of ability to produce something, yeah, you want a manager who is politically savvy, and who can protect you, and can promote you well in the stack rankings. (I had a couple managers who were /terrible/ at this, and my "performance" suffered. In reality it was all presentation and horse-trading).
    • r00fus 13y ago
      Great for the manager, and the employees, but what about the company? What sane business do you want managers being better at "stacked ranking" than product strategy? This to me, is indicative of why Microsoft has failed - when your daily job is to prove that the team next to you - not your team is the one that should take all the bad reviews, that's pitting employee vs. employee, when it should be employee vs. external competitors
• gametheoretic 13y ago
  Uhhh...decline? Gates stepped down in 2000, when Google was Goofy and the iPod was just an idea. Ballmer could've done worse for himself, to say the least. The very least. XP, Xbox, yes, Vista, but also the extremely impressive full swing, timely as a motherfuck recovery from Vista to launch Win7. (And while we're here, Win8 gets way more trash than deserved. The Start Menu was overloaded. People had like 200 goddamn folders in there. Don't shit on MS for trying something new at a time when something new was needed.) --and I'm not even an MS fanboy at all. This is just bullshit writing.
  • deleted 13y ago
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  • colmvp 13y ago
    I don't understand why hardcore techies wanted the start menu bad so badly. I used Windows for a long time before migrating to OSX and the usage of a 3rd party app called Alfred. Now I just type what program I want to open, which is significantly faster and easier than having to navigate through an OS. I'm sure Windows probably has an equivalent.
    • dalek_cannes 13y ago
      And Office ribbons. I used to work almost entirely with keyboard shortcuts in the menu/toolbar days for word processing (I used vi for coding). I actually liked the riboons.
    • cbhl 13y ago
      If you just start typing from the new start screen...
    • hornetblack 13y ago
      In windows Vista and up. Opening the start menu and typing would achieve this. In windows 8 opening the start screen and typing also does this. (Both can be done by pushing Super/Windows Key). This is the same in some Linux desktops, (At least GNOME 3, Unity and KDE)
    • 13y ago
• rsweeney21 13y ago
  This is exactly why I left Microsoft after 8 years. I worked really hard, had a great year and was expecting a great review. When I got my A-70 I told my manager I would be leaving. They offered me stock, a raise and even gave me a promotion, but I was done. I knew that I'd never be happy working under the Microsoft review system. I saw many great developers over the years leave for the same reason. This system is poisonous. There is no way to tailor the rewards of the team to the actual performance of the team.
  • ryanhuff 13y ago
    Sorry, what's an "A-70"?
    • kabdib 13y ago
      A = "Achieved" -- you did what you said you would do, and it's in line with your peers. 70 = You're an average Joe. You're not a bozo, and you're not a rock star, and you're not going to get a promotion soon.
      • chetanahuja 13y ago
        "70 = You're an average Joe. You're not a bozo, and you're not a rock star, and you're not going to get a promotion soon" And then they offered you a promotion to stay when you threatened to leave ?
        • hga 13y ago
          That tells you how bogus his review was. They didn't really think he was an easily replaced average Joe cog, but they had to fill all their various slots and, I suppose in their view, he should have been happy not to have to been allocated to a worse one. It's grading on an arbitrary curve, not on merit, "There is no way to tailor the rewards of the team to the actual performance of the team."
  • kvb 13y ago
    Rather than implying that Microsoft's system is broken, it seems that another possibility is that you had a shitty manager. Is there a performance review system that ensures that good employees are fairly rewarded?
• bguthrie 13y ago
  The only thing that matters about your coworkers––the only thing––is if, after the year's over or the project's done, you'd work with them again. If a team is doing good work and everyone on it enjoys working with each other, do not fuck with it. Everyone in life has disagreements, petty jealousies, things they struggle with in other people. The beauty of the question, Would you work with her or him again?, is that it specifically doesn't try to disentangle those things––because to a productive team the quality its members' relationships with each other as important as the quality of their work. If one or the other is off, it's not necessarily anyone's fault, and it may not even be cause for termination. But it's as good a metric as you need. But it's utterly foolish to winnow on a percentage basis. You'll break up good teams and prevent better ones from forming. You'll destroy morale. You'll encourage a leadership culture of cutthroat sociopaths whose success is at best tangentially related to the quality of their work. Do not do it.
  • ahk 13y ago
    When you tie my compensation to me having provably lousy coworkers, guess what happens.
    • w3pm 13y ago
      I think you misread the op's post -- the suggestion was, "would you work with them again." If they're lousy the answer is obviously no.
    • noloqy 13y ago
      Conversely, if you are graded on the curve, you want your coworkers to be provably lousier than you are.
      • hga 13y ago
        But your compensation still depends on having some "provably lousy coworkers", or worse, if they're all gone some people who are good will perforce get labeled as lousy.
        • 13y ago
• yuhong 13y ago
  Personally on stack ranking at MS I'd probably settle for ending some of the worst practices. Even Google's stack ranking don't have some of the problems of the one used by MS.
• afhof 13y ago
  It would be a lot more convincing if they could say Microsoft Stack Ranks And No One Else Does. Google, for example is a strictly stack ranked company and hasn't folded (at least in my opinion) into a caustic environment as described in this article.
  • nostrademons 13y ago
    Google uses stack-ranking in a very different way. At Google the stack ranks of all your peers are merged and then used as a sanity-check on the promotion process, to catch cases where a manager may be artificially inflating the reviews of his favorite reports or where he may be overlooking a star employee who everyone else in the organization agrees is worthy of promotion.
    • jvert 13y ago
      So Google has a different algorithm for computing the stank rank, but still stack ranks? Microsoft also incorporates peer feedback into the review process, but treats it as just another input into the manager's decision process.
  • deleted 13y ago
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  • rictic 13y ago
    At Google, each team is not required to have some percentage of their people on the shit list. I don't know if I can elaborate further, but I've been here for a few years, all on healthy teams, and being the lowest performer on a team doesn't mean that you're doing poorly. From personal experience it seems totally safe to be moderately awesome on a team full of super awesome people.
• beloch 13y ago
  The ideal employee is both brilliant and easy to get along with. Practically no employees are ideal. Sometimes the least productive people are the peace-makers that let the rest of the team tolerate the brilliant assholes. Cogs are great, but it's idiotic to treat oil as though it were mere deadweight. Both are needed in any company.
  • keithpeter 13y ago
    Belbin team roles as a way of recognising the oil? http://www.belbin.com/ http://www.belbin.com/
  • ak39 13y ago
    I agree. Well said. There may be a positive correlation between brilliance and assholism (I'm not advocating that we tolerate this, btw), but I'd definitely not superimpose the magnitude of that relationship for the other side/pole of the spectrum: viz. lack of productivity to peace-making personalities. My experience in the last two massive enterprisey projects shows that trouble-makers, obfuscators and team members who show little regard for either the creative (innovative) aspects of the project or, aspects relating to structure (admin) are the ones not pulling their weights. They often create social issues to divert from their own lack of productivity. What a waste. These folks I'd definitely not team up with given a second chance. They are cancer, and the spread can be malignant. (I am not saying let's be unsympathetic to the problems of the unproductive folks, but when lack of productivity or competence is deliberately masked by other fake reasons, it becomes difficult to engage with such folks honestly. The whole team then starts playing game theory and office gerrymandering becomes a career skill.)
  • codeonfire 13y ago
    that's fine as long as the oil is paid 10x less. oh, they want to be paid six figures to just sort of hang out a few hours a day, be everybody's friend, and leave by 3? The economics doesn't work because the productive people who are pulling 10-14 hour days will see that productivity is not necessary or valued and leave.
    • skore 13y ago
• plinkplonk 13y ago
  Interesting that Google also has stack ranking. If stack ranking were such a major factor of MS's decline why isn't it affecting Google the same way?
  • cromwellian 13y ago
    Google doesn't solely use stack ranking. Most of the grading is done on the OKR system with peer feedback.
  • dsymonds 13y ago
    Google uses stack ranking only for calibration across the company. There's nothing like "bottom 10% get fired", and in a team of high performers it's perfectly okay for everyone to get a great performance review, so there's no politics involved in that way.
  • potatolicious 13y ago
    What cromwellian said, but I'd also add that, as an outsider at least, the zeitgeist amongst people I've spoken to is that stack ranking is hurting Google. The poisonous effects of stack ranking may take time to manifest in a notable way at Google. Maybe if Google's products stopped being as cool as they are now, or their compensation is no longer as generous as it is now (see: becoming Microsoft), this would be accelerated.
    • DannyBee 13y ago
      Hurting how? Google doesn't fire the bottom 10% or whatever. They also don't completely screw the bottom 50%. The only curve that is enforced is really a calibration to ensure equal pay for equal performance across orgs
  • reeses 13y ago
    Because they're not yanking yet and the equity growth is still attractive enough to keep unvested "low performers" from leaving. Google don't have to cut costs to make Wall Street happy. They need to grow and increase the top-line, and for that, they need people. Once they reach the point of "maturity" where they need to minimize operating costs to increase net margins and continue to justify their P/E, they'll be like Cisco, Microsoft, Intel, and others, disgorging 5-30% of their workforce in a single massive push.
• dkhenry 13y ago
  This isn't a Microsoft thing. If I remember correctly its used at IBM as well as a bunch of other big name companies. http://en.wikipedia.org/wiki/Vitality_curve http://en.wikipedia.org/wiki/Vitality_curve
  • CountHackulus 13y ago
    From experience at IBM, it was just as terrible there.
    • dkhenry 13y ago
      I would never claim it was a good program, but this is actually much more common at your big companies then people would like to think. I know the Government does this in both the military and civilian workforce. Most government contracts I have worked with do this ( Lockheed Martin, SAIC, and Boeing ) I think until you have been in a big corporate environment you don't really appreciate how little they care about their workforce.
• Patrick_Devine 13y ago
  I worked at a rather largish virtualisation company which uses the "Nine Box" performance review process. The idea is that you get two scores, your _public_ score which is told to you about your performance, and then a _private_ score which is surreptitiously given by your manager about your potential to get promotions. Managers are then given a quota of how many people should be put in which box, and get hammered if they give too many people good reviews. The "secret" score is directly tied to your compensation, so basically your manager could be completely screwing you and you would have absolutely no indication.
  • Domenic_S 13y ago
    > and you would have absolutely no indication. Except for your paycheck?
    • Patrick_Devine 13y ago
      My suspicion would be they use plausible deniability. "We're not giving out great raises this year". Which is technically not a lie, I suppose. They're not giving out a great raise _to you_.
• pkj 13y ago
  Most companies use a variant of stack ranking. If you agree with the core philosophy that more productivity => better pay, then you need to implement some sort of a differential pay algorithm. Having said that the implementation really sucks. It is not natural and continuous, rather people get pigeonholed into discontinuous buckets. Let me take a concrete example closely mirroring my experience. There are 4 fixed performance buckets. Top 5%, Next 20%, Next 65%, Bottom 10%. They get hikes of 20%, 8%, 4%, 0% respectively. Again, these are fixed numbers. Let us assume there are 4 people A,B,C,D and out of a hypothetical score of 100, score 95, 90, 87, 85 respectively based on various parameters. You would assume that since D differs in ability with A by 10%, he would get 90% of A's hike. But sorry, due to the stack implementation he gets 0%, while A gets 20% ! Let's say if the scores of A, B, C, D were instead 100, 50, 25, 5, the hikes would have make much more sense. Summary: Discrete curve of benefits works well only when it closely matches the curve of people productivity. This is rare. So it just ends up being unfair and creates an unhealthy rat race.
  • njr123 13y ago
    I disagree with the whole premise of 'productivity => better pay'. I think it is much better and easier just to pay everyone in the same role the same (maybe with some company wide profit share) and then fire all the bad people as quickly as possible. You avoid all the politics of performance reviews, and the problems of how to rank the relative value of different skillsets. Incidentally, I believe this is the system that netflix uses? Identifying the bad people usually pretty easy. The problem I find is that most people in software a pretty non-confrontational, so it is hard to get them to fire the bad people, even when they are obviously bad for productivity.
• hatchoo 13y ago
  I used to work with Andersen Consulting/Accenture. We had this ranking thing as well. Had lots of peers who were of the kiss ass type. Fortunately was very technical and stood out while still at the programmer/analyst level. Would have fared poorly at the managerial level though. Many other companies probably have this too.
• deleted 13y ago
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• michaelwww 13y ago
  This reminds me of mandatory minimum sentencing that takes the jail time given away from the discretion of the judge. It seems that Microsoft doesn't trust it's managers to make objective reviews, especially to call out poor performers who are otherwise liked by their coworkers. There must be a middle way.
  • threeseed 13y ago
    Exactly. And we have a tried and true way of identifying great managers. Can you deliver a great result, on time and on budget. Why MS never focused on output is beyond me.
• chatman 13y ago
  Haha, Yahoo does it every 3 months since Mayer came on board! Soon, even Yahoo will crumble like this.
• danbmil99 13y ago
  What I love about the last decade of the Microsoft saga is how Bill left Stevie holding the bag, just when he knew it was going sour.
• kdsudac 13y ago
  The most frustrating thing about these kinds of systems is how they never seem to apply at the top. Was Balmer a top CEO? The market doesn't seem to think so.
  • psbp 13y ago
    Apparently the board didn't either. I guess they just get a much longer review cycle.
• deleted 13y ago
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• sytelus 13y ago
  This is not a problem inherent in stack ranking. Any performance review system that (1) allow unbalanced pay and (2) makes this fact visible to employee, will cause exact same issues. Here unbalanced pay means you want to divide available reward such that higher performing employee gets lions share while those at the tail gets peanuts. Whether you do this through peer reviews or through manager reviews or stack ranking or team level performance or by throwing dice, you will always find some portion of employees feel the system is unjust and they deserve better ratings. Only way to avoid this is by equal bonus pays OR not assigning any ratings at all. For most technology companies at least the option of paying every one equal bonus won't be acceptable. It is known fact that highest performing employees perform 5X-20X than lowest performing employees and it would be hard to retain them if they were paid same bonuses as everyone else. However not disclosing ratings could certainly be option. Or you can only disclose binary ratings "Stay/Fire" or trinary rating "Green/Yellow/Red" where they don't disclose amount/range of bonus but whether employee performance was sufficient for continuity of employment. People who thought that disclosing bonus indicating ratings was a good idea probably bought on an argument that this will motivate employees to improve themselves to get higher ratings. In reality many aggressive employees actually do work even harder to get back to better ratings however people who have feel lack of opportunity or are rusted eventually settle down with being labeled "average" and pull back on their effort level just to keep employment going.
  • simonh 13y ago
    The problem is that if you have an A team where all the members are performing well and deserve good compensation compared to the rest of the company, stack ranking forces you to penalise some of them anyway, even if its for minor petty reasons that in other teams would not be a factor. Nobody is arguing that good people shouldn't be rewarded compared to poor performers. The problem is that stack ranking actively works against the formation of stable teams of high performers anywhere in your company.
  • tytso 13y ago
    You are assuming that monetary compensation is the only motivator for employees. And that's simply not true. Once people have enough that they can feed their family and put their kids through college, money isn't as important a motivator. So while you do want to reward your superstars, it follows that (a) the fact that lower performing employees get paid less may not be so much of a problem, so long as they are adequately paid (i.e., not "peanuts"), and (b) money may not necessarily be the best way to do this --- you need to make sure that their good work is recognized, and you need to take into account what they want to work on. At the end of the day, it's going to be the other things; a fun/pleasant workplace, development tools that don't suck, a collegial environment, which are going to be more important for most employees once their basic needs are met. Perhaps in a startup environment, where hours are long and the pressure to ship trumps everything else, people forget about these things and think only about the compensation which will hopefully be coming over the horizen in case the startup makes a successful exit. But in a more mature company, I'll suggest that an attitude like that is extremely short-sighted.
• chris_wot 13y ago
  The end sentence is absolutely damning of the man: "It will be interesting to see whether Microsoft’s next CEO takes more personal responsibility for the company’s corporate culture—or leaves it for Lisa Brummel to take up."
• phantomb 13y ago
  I understand Enron tried the same thing. These people are idiots. http://postbiota.org/pipermail/tt/2007-June/000884.html http://postbiota.org/pipermail/tt/2007-June/000884.html
  • at-fates-hands 13y ago
    They actually talked pretty extensively about this in the documentary "The Smartest Guys in the Room". I just remember watching with my jaw on the floor wondering why an organization would pit employees against each other like that. The fact MS continued to adhere to it after Enron's collapse is stunning.
• dotmanish 13y ago
  Adobe used to have the Stack Ranking System until a couple of years, which they eventually ditched: http://www.hreonline.com/HRE/view/story.jhtml?id=534355695 http://www.hreonline.com/HRE/view/story.jhtml?id=534355695
• lzman 13y ago
  I was a programmer a UK banks for 5 years where they used (and still do use) the bell curve performance rating system. High performing teams match the bell curve distribution, therefore match the employees to the curve and you have high performing teams. It, and a load of shit directly related to it, is why I left.
• netcan 13y ago
  This sounds like one of those ideas that works well in a one off context but has side effects in a relatively big one. Using a bell curve might be more technically correct, but the overall idea is too force the person making a judgement to make a judgment. The reality is that some employees are better than others. Getting a manager to rank them will give you better results than getting a manager to rate them. Neither are perfect. One is sensitive to the manager's biases, the other breaks when one team is better than another. If you went to a one hundred person company with 10 managers and asked them to do this one day, you would probably end up with a fairly accurate view of who is worth what. Most one hundred person companies would be improved by replacing the bottom 5-20 people and damaged by replacing the top 5-20. If this wasn't about employees, I don't think it would be controversial. Imagine a company with 100 clients ranked them and then decided to give special attention the 10 best while ignoring the 10 worst. The problem with this (like most compensation schemes) is how they affect employees when they find out. People have strong reactions to being ranked and measured.
  • rodgerd 13y ago
    > Using a bell curve might be more technically correct But it's not. That's what's so maddeningly stupid about it. Who gives a fuck if your employees are better or worse than one another? The only question that matters is whether they're doing the job you need done to the standard you need it done to. Arbitarily punishing some percentage of your team even though they're doing a great job is madness.
    • netcan 13y ago
      The bell curve suggests that in a group of 20 employees, #8 & #12 perform similarly. #1 probably performs a lot better than #4. Thats what I meant by more technically correct. "the standard you need it done to" doesn't really fit the model of what MS do. "great job" is relative. Anyway, the whole thing probably carries some assumptions. Some employees are great. Some stink. It's unlikely that a team of 20 will have a couple of stinkers. Employees #19 & #20 are adding little (or negative) benefit. It's dehumanising. I agree. So are all management practices at companies big enough. It may also be wrong considering how it affects morale and how it affects productivity when people try to game it (seeking out weak teams). I just meant that I can see where it comes from. It would make just as much sense if you asked a restaurant owner to rank his mains. Out of 15 mains, 2-3 are probably stars that people come specifically to eat. 10 are OK. 2-3 suck, they make people not come back.
• tytso 13y ago
  "Stack ranking" as it has been reported to be used at Microsoft, is multiple things conflated together. Some of these things are, by themselves, not necessarily bad. The problem is that people hear the words "stack ranking", and immediately jump to "eeeeevil" and "that's what killed Microsoft", and "Google does stack ranking, it must be doomed / I'd never want to work there", which is sloppy thinking. Let's taking what people are calling "stack ranking" apart. The first aspect of stack ranking, is simply forcing people to make decisions about what things/object/people are more important/better/etc. than others. This can be a valuable technique. For example, there is a very useful testing instrument I took a while back that took a list of twenty values, e.g., "justice", "loyalty", "honesty", "security", "family", etc., and asked me to force rank sets of five of these values in order of which I thought were most important to least important (i.e., DNI Clapper would rank "honesty" below that of "loyalty" and "security"; others might make different choices --- there were no right answers). By taking twenty or thirty of these different subsets, ranked in the order of which I thought were most valuable, a computer program would allow me to see which values I considered most important, and which I considered least important. This was a valuable thing, and so the technique of doing forced ranking is and of itself a useful thing. The second technique is that of trying to normalize employee performance review ratings across departments --- whether using a bell curve, or some other technique. Again, in isolation, this isn't necessarily a bad thing. Some managers might grade their employees more harshly, and some might be soft touches. Within a departmental level, it may be easier for a manager to argue that his team were all stars, but how do you deal with the question of an entire department using a harsher or more lenient grading system? One of the simplest things to do is to use a bell curve --- which may or may not be fair, especially if the company says (and all companies will claim this) that they hire the "best and brightest". The final component is what do you actually do with this normalized ranking number? If you really believe that everyone you've hired are the "best and the brightest", then firing the lowest scoring 5% is insane. If however you don't have confidence in your hiring mechanisms, such that some duds make it past your hiring screens, then firing the lowest 5% may make a lot of sense; you want to get rid of them before they do (more) damage. (BTW, this is is why I believe a hiring system which tries extremely hard to avoid hiring duds, at the expense of sometimes failing to hire qualified individuals, is extremely important; it has its downsides, but it's very much a necessary evil, because the alternatives are far worse.) What about using this number as an input to compensation? Here, using a normalized bell curve may make more sense. Certainly if you only have fixed pot of money to use for salary increases and equity refreshes, you want to make sure that your top performances get rewarded. What about promotions? For junior engineers, if they are growing in their job, presumably they should get promoted as they demonstrate that they are getting better at programming and understanding the company's systems and development environment. Using the performance rating would certainly be one metric, but evaluating that person's proficiency and results should probably be just as important, if not more so. The point is that just doing a "stack rank", whether as an input to the performance review mechanism (i.e., asking other employees to stack rank their peers, and then having some algorithm to merge those inputs together, and taking into account controversial rankings where multiple colleagues had differing opinions about whether person A was more or less effective than person B) or whether managers are forced to stack rank all of the employees in their department, is not necessarily a bad thing. The problem comes from what do you _do_ with the stack ranking after you've generated it. It's that which can drive a company's culture, either positively or negatively. So my suggestion to Microsoft employees (other than to consider a career at Google :-), is to not rail against stack ranking per se, but to point out some of the negative effects of some of the things are done with the stack rank after it has been generated. Perhaps, if your HR people are at all competent, they might be more amenable to your suggestions. Or, maybe you'd be better off considering another company altogether, in which case my first suggestion still stands. :-)
• rayiner 13y ago
  This bit stuck out for me: "For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door." Individualized bonus/compensation decisions have no place in environments where the work is heavily or totally team-oriented. It forces people into a mode where they focus on getting the most individual credit instead of making the product as successful as possible. That general incentive exists in any team-setting, of course, but when you grade everyone on a curve like that and tie compensation/job retention to it, you really force everyone into playing that game. By way of contrast, look at how investment banks do bonuses. If you're in IBD, your bonus is usually based on the success of your deal teams. If you're in S&T, your bonus is usually based on the success of your desk. Even further in that direction is how many law firms handle compensation: everyone is paid in strict lock-step. The end-result of these models is that nobody has an incentive, at least a purely monetary incentive, to jockey for credit. The way to make more money is to have the project be successful, and that means doing your best to cooperate with your teammates. Sometimes you're forced to pay individualized bonuses. It might be the only way of attracting the superstar that would otherwise be able to make a lot more money elsewhere. But Microsoft has very high hiring standards and is rolling in cash. It should not have this problem.
  • kenshiro_o 13y ago
    That simply isn't true in the world of banking. Why do you think the financial crisis occurred? Bonuses are DISCRETIONARY and therefore even if trader A and B are in the same division, trader A may get a significantly higher bonus than B because he made more money or was simply more astute at the politics game.
    • chronic25 13y ago
      What you just said only applies to trading. Not IBD, HF, PE, which are more team oriented.
  • kvb 13y ago
• epynonymous 13y ago
  this is just the dumbest article i have ever read. there are very few top performers, a types with an appetite for challenges, who would work in a meaningless project just to compete with mediocre talent, that's absurd! number one motivation issue is a bad manager, closely followed are lack of career development where in i mean interesting technical challenges andncompeting against the best and project interest. a types or top performers who take initiative and want to work on the biggest challenges do not shy from challenges, in fact, they want them! the types that shynfrom challenges and curl into meaningless projects are those that seek work life balance and are really your low performers.
  • lzman 13y ago
    You've missed the point. In a company where everybody performs equally, the ratings would still have to be distributed between the following rankings, regardless of actual performance. Amazing Good Average Poor Judging by comments, it appears to be the #1 choice for HR departments. Which is just plain depressing, but more depressingly, not surprising.
    • epynonymous 13y ago
      bell curve, nothing new
• api 13y ago
  Hasn't Google implemented stack ranking?
• api 13y ago
  Ranking and selection systems -- fitness functions -- are very very hard to get right. I did a lot of work with genetic algorithms and evolutionary computation / alife systems a while back, and thus did a lot of work with writing fitness or objective functions. It turns out that it's extremely difficult to write a fitness function that the evolving system will not "game." To give a specific example: I once wrote an objective function to train an evolving system to classify images, a simple machine learning test. After running it for only an hour or so, the system's performance seemed spectacular, like way up in the 90'th percentile. This made me suspicious. The programs that had evolved did not seem complex enough, and past experiments had shown that it should take a lot longer to get something that showed reasonable performance. After a lot of analysis I figured out what it was. I was pulling test images from two different databases. One database had higher latency than the other. The bugs had evolved a timing loop to measure how long it took them to get their data (they were multi-threaded) and were basically executing a side-channel attack against the training supervisor. In another very similar case, I found that the bugs were cooperating by communicating by way of the operating system's thread/task scheduler. They were using timing loops to kibitz. Humans are smarter than little evolving computer programs. Subject them to any kind of fixed straightforward fitness function and they are going to game it, plain and simple. It turns out that in writing machine learning objective functions, one must think very carefully about what the objective function is actually rewarding. If the objective function rewards more than one thing, the ML/EC/whatever system will find the minimum effort or minimum complexity solution and converge there. In the human case under discussion here, apply this kind of reasoning and it becomes apparent that stack ranking as implemented in MS is rewarding high relative performance vs. your peers in a group, not actual performance and not performance as tied in any way to the company's performance. There's all kinds of ways to game that: keep inferior people around on purpose to make yourself look good, sabotage your peers, avoid working with good people, intentionally produce inferior work up front in order to skew the curve in later iterations, etc. All those are much easier (less effort, less complexity) than actual performance. A lot of these things are also rather sociopathic in nature. It seems like most ranking systems in the real world end up selecting for sociopathy. This is the central problem with the whole concept of meritocracy, and also with related ideas like eugenics. It turns out that defining merit and achieving it are of roughly equivalent difficulty. They might actually be the same problem.
• DenisM 13y ago
  For the sake of balance let me provide some "defense" of the system. I don't actually like it, but there needs to be some perspective in the discussion. A senior manager once confided to me that he does not have a shortage of good engineers to tackle even the most complex engineering problems, but he has acute shortage of people who are able to coordinate work of those good engineers. I have then concluded the review system makes sense in the light of this revelation. Hiring and Performance Review policies, however bad they seem, successfully maintain a pool of talented engineers; it's a solved problem. The problem that is not solved is making sure those engineers make coordinated effort towards a worthy goal. It is Microsoft's core belief that such coordination does not emerge naturally and so it must come from a leader or a group of "leaders", and the goal of the review system is to identify and promote such leaders, even if they have to sacrifice some of the good engineers in the process (finding more is a solved problem). The way the find more "leaders" is measure people on "scope of influence", with idea being that top engineer and manager talents will be able to influence more people compared to their peers. A sad byproduct of this approach is that a lot of people expand their visibility just for the sake of expanding their visibility. This produces a lot of sideffects, to the point where they sometimes become major output of the system rather than mere byproducts. So if you wanted to know why the system works the way it does, above is a possible explanation that makes some sense.
• icecreampain 13y ago
  Can somone please explain to me the attraction of working at a company with such a ranking system? Are [tech] jobs _that_ hard to come by nowadays that one is willing to accept anything to pay the bills?
• deleted 13y ago
  [deleted]
• bosch 13y ago
  (Apologies for posting this as I know it doesn't add to the discussion but I have no idea how else to contact an MS engineer.) Help!!! On the off chance anyone at Microsoft reads this, my Microsoft account got deleted by a bug in Live Domains and I haven't been able to successfully contact anyone to report it or fix it. The forums have been useless and now I can't do anything MS related without my account including my phone! My e-mail is in my profile.
  • marshray 13y ago
    Sorry, I don't know anything about the process of recovering your account info. But if you can describe the bug in enough detail that someone might be able to repro it I can forward that to the right person. (Which certainly couldn't hurt your chances I figure.) Email me ['m', 'a', 'r', 'a', 'y', '@', 'm', 'i', 'c', 'r'...dotcom]