93 ms·

Microsoft does away with stack ranking

489 points by cnahr 13y ago

pmh 13y ago
Interesting timing given the article and discussion yesterday [1] about other companies using stack ranking. I wonder (and to some extent hope) that the others follow suit. [1]: https://news.ycombinator.com/item?id=6712717 https://news.ycombinator.com/item?id=6712717
- dhyasama 13y ago
  Especially interesting considering the author of that article works at Microsoft
  - umeshunni 13y ago
    Yeah - as a manager, he probably knew about the changes a day earlier and hence decided a pen a post criticising other companies' ranking systems.
    - pagefault 13y ago
      Managers found out this morning. It's possible he was part of a pilot program and had early knowledge, but I suspect it's a coincidence. If anything, having early knowledge would likely have kept him from writing that until after the new Microsoft program was announced.
curiousDog 13y ago
Looks like the process will be more peer driven. There'll probably still be ranking to find the top performers rather than weed out the bottom 10, which is good.
ethomson 13y ago
This was seemingly inevitable whether this is actually useful or not. Microsoft has been getting increasing heat about our stack ranking system, both from employees and from external people. But I don't think stack ranking is our problem. I think our problem is that we value this notion of the brilliant and excellent individual contributor instead of valuing employees that value teamwork and team problem solving. I suspect this is an institutional problem, having been started by exactly that sort of person. It's this that causes the backstabbing and the mess that people attribute to "stack ranking". Until we put value in changing this culture, I don't see too much changing. (Disclaimer: my team at Microsoft is sort of odd - we're not in Redmond, and I don't see a lot of this backstabbing that is oft-reported. I do see our managers overvaluing the brilliant IC and I do see my organization undervaluing teamwork, but at least we're not doing that stupid game playing like joining weak teams to get great reviews.)
- Zigurd 13y ago
  I think that's an accurate assessment. It certainly wasn't stack ranking that made J Allard leave. Microsoft has an inward looking culture because there is so much money to play with when Microsoft launches a huge initiative like XBOX or Windows Phone. Google's "moon shots" and Apple's "hobbies" are not instant tickets to the top of the organization. Overlaid on those high-stakes struggles for control and prominence are some correspondingly huge egos, whence come dogmas like "Everything Windows." The Enterprise part of the company suffers less from this because the growth there is more organic.
- r00fus 13y ago
  Isn't it the case the stacked ranking exacerbated the backstabbing issue? I see this move overall as a positive one for Microsoft - without removing the perverse rewards to screw over your teammates and other teams, the actual cultural fix can't take place. I think the culture will shift soon - Microsoft, for more than a decade, had no real competitors. They made more money each year whether they executed (see Win2k) or not (see Vista). Consequently, their biggest threat was actually internal. Stacked ranking enforced this, and prevented internal response. Now that situation is changing (or has changed). Microsoft is looking at actual competition in the form of Apple and Google as mobile and search erode the desktop. On the datacenter side, Amazon and other cloud provider are threatening Microsoft's server profits. When the heat gets strong enough, there will be a unifying force within the company (or it'll just crumble - personally don't think that's the case).
  - ethomson 13y ago
    My point was that no, I don't think stack ranking provides a greater impetus to backstabbing your coworkers than this sort of vague compensation model. In fact, I think a continuous model may lead to more backstabbing than exists now. Currently, I go into a bucket - let's say I'm a two, for instance - and all the twos get the same compensation. Can I backstab somebody so that I get a two and they get a three? Maybe. But if we remove the buckets and we have some continuity, where now if my coworker outperformed me and we were both twos... now this coworker just straight up outperformed me. I'm more inclined to want to stab that person in the back so that I'm better, since being almost as good isn't valuable anymore. Now, it's possible that we'll end up with stack ranking all over again. The previous compensation before the current stack ranking system put you in a bucket from 5-1 where 5 was good and 1 was bad. So... it turns out that we don't change this very much even when we do change things.
ujsfdo 13y ago
Bill Gates improved the world!
- iancarroll 13y ago
  Shoo.
Shenglong 13y ago
We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget. Is this not in effect the same as a curve? Giving higher bonuses to one person means giving lower bonuses to another. Giving everyone the same bonus discourages high performers from staying (and also working on the same team). People who receive little to no bonuses take the hint to leave, just as if they had received a 4 or a 5. Considering only 10% of employees receive a 4, and 5% receive a 5, I'm thinking that effectively, there has been no change.
- robododo 13y ago
  Yes, but there is no forced curve fit. A healthy organization will always "manage out" people who are not fit for the job. At Microsoft, folks are given the hint early enough that they can explore other internal options before leaving the company entirely. Though, to be honest, if someone just can't cut it, they will leave the company.
  - brosco45 13y ago
    That's not how it works, the best leaves, the political ones stays. Microsoft is so toxic now it's hard to imaging them saving themselves anymore. Maybe if they fire all middle and upper management.
  - amaks 13y ago
    "At Microsoft, folks are given the hint early enough that they can explore other internal options before leaving the company entirely." Except that it doesn't work. No internal hiring manager will ever allow the interview loop/transfer for the internal candidate with the score 4 or 5 (I think those are the lowest scores in the current model:-). In 99.9% of cases those unlucky who got 5 get laid off by the next review period.
    - robododo 13y ago
jrockway 13y ago
This sounds pretty good to me. If they actually implement what they wrote about here, I think Microsoft could become one of the better big companies to work at. (I have a friend who works at BofA. They wanted him to take on a new project that he wasn't interested in. As a reward for agreeing, they went back to his old performance reviews and changed them from "Meets expectations" to "Exceeds expectations" and then promoted him for excellent performance. LOL.)
joeldidit 13y ago
I almost wet myself.
gesman 13y ago
Stack ranking is created by management's inherent inability to trust people. And that, in turn, is created by management's inability to trust in their own abilities. This is proved to be true in case of Ballmer and overall Microsoft's performance while under his leadership. These changes are surely a positive sign for Microsoft.
jmspring 13y ago
An interesting read related to the topic -- Sinovsky on performance evaluation and large orgs: http://blog.learningbyshipping.com/2013/11/09/realities-of-performance-appraisal/ http://blog.learningbyshipping.com/2013/11/09/realities-of-p...
ffrryuu 13y ago
Microsoft is having a horrible time hiring anyone due to the stack ranking. The rot is now too deep.
Patrick_Devine 13y ago
This is good to see. The whole premise of stack ranking is fundamentally flawed. Clearly there is a curve that when applied to an entire population shows that there are under-performers. So far, so good, however, the problem is that stack ranking isn't applied to the entire population since it's impossible to normalize the performance of each individual. Instead, companies that stack rank do it on a team-by-team basis, which is a statistically inaccurate sample of the population where there can be a lot of skew. Since it's up to the manager to rank their employees, this causes a lot of problems. This is particularly a problem if the manager sucks at hiring, or over hires for their team, and there is a lot of chaff. There is a massive incentive to do this, because the more employees a manager has, the more corresponding perceived worth in the organization they'll have. Plus, if it comes time to cull, it's really easy to shield the favourite employees, even if they have performed poorly, without disrupting the organization. On the flip side, if you're really, really careful about who you bring on board, your team is in a weaker position because there is no one to terminate. This means you get rid of good performers based on bullshit metrics. I saw this happen at a largish virtualization company where one of the best employees on our team was let go because he had some minor HR-ish type issue. This caused a big percentage of the team to be demoralized and ultimately leave.
- nikatwork 13y ago
  Sounds like an evil but effective way to combat the BS of stack ranking - keep a couple of obviously subpar staff chained up in the corner ready to be sacrificed at the review altar then replaced. Honestly, I can see the benefits of SR as a once off "clear the decks" purge, but as a continual measure it's insanity.
DenisM 13y ago
If I remember correctly, they promised that before, and all that came out was that "the curve" was still there, but hidden from sight and under a different name.
san86 13y ago
I kinda like what my employer does. There is a 1-5 ranking, but the distribution/buckets for bonus is determined after the reviews are complete. Of course, the concern here is that management "can" slot the buckets in a way that suits them, but I trust them enough to not do that.. Due to this, no one knows "what needs to happen to get X bonus".. everyone is just trying to do their best to get to the highest score and the amount of cash you get depends on what bucket you fall under
Ensorceled 13y ago
One major thing I learned from 360 reviews is how bad developers are at judging each other or their manager. I've had employees on probation for lack of productivity judged as excellent by their peers because of their ability to socialize their "abilities". I had the best developer on my team (a 10x developer if ever there was one) get slammed on technical ability rankings because of his prickly personality. My VP and I used have quite the chuckle at all my "strengths" identified by my team and peers ... because they liked me and I was effective they attributed positive characteristics to me that I did not have.
- ddoolin 13y ago
  I've always been highly sociable compared to my other coworkers and have also noticed I get attributed things that weren't really accurate. Notably non-technical coworkers seem to think I work at break-neck pace when I really just work at pace with everyone else, most likely because I actually talk about what I'm doing with them more often.
- YZF 13y ago
  360 isn't perfect but it's better than the alternative. You're basically saying that those who worked daily in close interaction with the 10x developer and had to work with the code that developer produced, had lower regard for his technical ability than a manager who presumably is further removed? You can't ignore the social aspect. A team with social frictions isn't going to work as well as a team that enjoys working together. Obviously just being social isn't enough but a strong team needs a combination of the social and technical aspects. Also 360 should mean going beyond the team, so the manager should be evaluated by his peers, his managers and his team and technical people on the team should be evaluated by members of other teams they work with.
  - Ensorceled 13y ago
    Yes, I know what a 360 is, I've participated in them. In the situations I indicated I was also a developer on the team so I knew how productive and skilled the 10x prickly developer was. His peers ranked him high on technical skills but only as high as more amicable and lessor skilled peers. I'm not saying I ignored the social aspect, in fact that is why I called him "prickly". I'm just saying that, while his teamwork related areas were properly low, his technical areas were improperly low because of this halo effect.
alkonaut 13y ago
I wasn't aware that US companies ranked employees and used rankings when purging the workforce (when I think about it it's a pretty obvious idea). In countries with stronger labour laws "underperformance" basically isn't a reason to fire someone. The employer is responsible for the employees performance (training etc.). This can be frustrating in the software business when just a few really poor performers can really sink a team. Obviously forming a really elite team in the US is easy, since you can purge from the bottom, provided you don't affect morale too negatively. But how do you do it in countries where firing for underperformance isn't an option? It's really hard to get away from a bell-curve team.
- sib 13y ago
  "In countries with stronger labour laws..." Interesting. I would refer to those as countries with "weaker" or "perverse" employment laws...
  - cesarbs 13y ago
    I think that's really subjective. There are always ways to abuse any kind of system. Take for example working hours. A country with strong labor laws will usually prohibit employers from making employees work more than x hours a week, and if they do that they have to pay for overtime. That will make some people happy and productive because they will feel safe having protection from the system. But some people will abuse it and slack off. On the other hand, if you don't have control over that you might end up in a situation where people are only considered good employees and productive if they work crazy hours all the time. Instead of being abused by employees, the system will be abused by the people at the top. And I guess that covers underperformance. Who defines what bad/average/good performance is? Is the guy who does really good work considered to be underperforming just because he works 9-5 and wants to spend quality time with his family instead of making the office his second home? That kind of thing has to be prevented by law.
  - Brakenshire 13y ago
    Can we drop the manipulation of language? Strong is obviously equivalent to strict, the meaning is clear-cut. It's not difficult to use these words and disagree with the principle they describe.
anmalhot 13y ago
i hope this will curb people from constant backstabbing that I witnessed during my short duration there. It was painful to watch very smart, bright people indulge in really pathetic behavior consciously to 'protect' themselves..
j_baker 13y ago
The last bullet point strikes me as incredibly odd. No ratings? How will managers determine raises and bonuses if they don't have a rating to determine whether the employee is meeting expectations or not?
- waqf 13y ago
  You're asking how managers will be able to freely assign numbers to individuals according to their performance, without being guided by numbers that the same manager previously freely assigned to the same individuals according to their performance?
mkramlich 13y ago
Good for them. I don't like Microsoft but I like to see any company getting smarter. It's hard enough as it is to find and keep good people. And there are pretty obvious alternate ways to identify and expel "dead wood" if that was their original justification for stack ranking.
Todd 13y ago
This is a great move for the company. Especially now that so many competitors have internalized the process. It was the single most identifiable thing that poisoned the culture at the company. It will be interesting to see what they replace it with. The process certainly made it easier to make decisions higher up the chain (even if it was difficult for the managers and their direct reports).
SubuSS 13y ago
>We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget. The compensation budget is the key part here. I don't know how this is going to account for: - Failed products with smart developers and their retention. - Avg products with very smart developers - Less 'visible' projects. Those that management don't realize is necessary until you have no one working on it. (This happens a LOT in big companies). All this can be solved by pumping a ton of money into this as they are alluding elsewhere though. Overall the fact that they are taking feedback seriously and are working towards a solution is pretty positive though.
jasonculbertson 13y ago
I saw the downfall of stack ranking immediately after a company I worked at was acquired by Microsoft. The workplace changed within a month from one focused on teamwork and support to Lord of the Flies. When the only way you can succeed is by being "better" then someone else you are forced to step upon others. I believe that this is also the effect of working for a public company with a stock that hasn't moved in price in 10 years.
- nikatwork 13y ago
  Seen the same - work turned into a Survivor gameshow. Instead of concentrating on the product, everyone formed alliances and ganged up on the less-liked people. Everybody was so focused on politics nobody cared about the product anymore. Then the product died. I still don't think our MBA execs learned a damn thing from the whole fiasco, I'm sure they're somewhere else getting paid big bucks to run some other poor teams into the ground.
  - VodkaInferno 13y ago
    I've seen this a few times at MSFT. Except that the product didn't really die because nobody wanted to take responsibility for the actual killing. And every now and then there would be a re-org, the former exec would "move on" to his next atrocity and a "recycled" exec would go in front of the team and declare his passion for the product and that this time it will be different.
mathattack 13y ago
Now that they get rid of it, I wonder if they're going to run into problems on the other extreme... - Difficulty knowing who the best employees are. - Employees surprised by layoffs. "I thought I was doing well." - Managers slacking on giving constructive feedback. Performance management is such a tough subject. Both extremes (ruthless stacking, and no-curve) have issues and I don't know a better solution.
- pagefault 13y ago
  Part of the new program is an explicit focus on frequent feedback. If anything, there ought to be fewer surprises than the current once (twice-ish with midyear discussions) a year feedback. The risk going forward is that without being forced to a distribution, wishy-washy managers will trend towards the middle. High achievers will be under-compensated, and under-achievers will be overcompensated. The budget hasn't changed, so the same pool of money has to be divided among the same set of people, managers now have more freedom as to how.
  - mathattack 13y ago
    My experience is that wishy washy managers make everyone top rated, therefore nobody is really top rated.
    - pagefault 13y ago
      If everyone gets top rated, then the budget gets applied, everyone gets middling awards. Same result as rating everyone middling in the first place.
bmohlenhoff 13y ago
It's nice that now they are going to value teamwork and collaboration more highly, but I don't see the lack of a curve making much of a difference in compensation level for the average contributor. The total size of the compensation budget is fixed, and they have to spend all of it. Just because now 30% of the staff can fall into the Exceed Expectations bucket doesn't necessarily mean that the budget increases. The money gets divided differently, that's all. It does seem like a positive change though if they can improve the culture of the workplace and minimize the amount of backstabbing, cronyism and political nonsense.
fluxon 13y ago
This is interesting in the context of https://news.ycombinator.com/item?id=6712717 https://news.ycombinator.com/item?id=6712717 "Why are Amazon, Facebook and Yahoo copying Microsoft's stack ranking system?" - the feature copying usually goes the other way.
cykho 13y ago
This is going to open the floodgates of deadwood. Stackranking at least forces hard choices. They just needed to adjust the curve by team performance. E.g. rockstar teams have more exceeds than underperforms and a failing team has more underperforms than exceeds. Under the most recent system the best way to get a review is to be an A player on the B team.
mbesto 13y ago
Curious - what's the origin of stack ranking? Was there any science (psychology/sociology) behind it?
- nness 13y ago
  I'm not sure how it was developed, but its popularity is credited to Jack Welch, who introduced it to General Electric in 1980. In doing so, GE experienced a "5-fold increase in revenue": http://en.wikipedia.org/wiki/Vitality_curve http://en.wikipedia.org/wiki/Vitality_curve
  - marshray 13y ago
    In 1980 President Reagan was elected. In addition to many technologies (e.g., LSI ICs) coming online, the amount of taxpayer debt that the US government funneled into our industrial sector over the next few years was simply staggering. One should look at where this revenue was coming from and compare GE to other companies in the sector (i.e., other makers of nuclear reactors and jet engines) during this time before drawing conclusions about personnel management theories (of all things).
- michaelt 13y ago
  I've heard it attributed to former GE CEO Jack Welch [1] who is apparently Fortune magazine's Manager of the Century. In terms of hard science, unfortunately blind randomized controlled trials are impossible, so it's not possible to definitively isolate causal relationships and confounding factors. "It seemed to work for GE in the 1980s" is the best that's on offer. [1] https://en.wikipedia.org/wiki/Vitality_curve https://en.wikipedia.org/wiki/Vitality_curve
tn13 13y ago
No one actually says stack ranking is bad. But in reality it is very effective in getting rid of few troublemakers.
- marshray 13y ago
  I'll say that stack ranking was bad and any US company can fire troublemakers without it.
kmeredith 13y ago
I'm a big fan of Dale Carnegie, http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influence_People http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influenc.... But, I think that leadership/true emotional control means that, even if someone is treating you wrongly or criticizing you, you can dissect the behavior, and then appeal to reason. For example, I appreciate, and even invite, ruthless criticism ("go ahead and insult me if necessary") when getting feedback (on my code, performance, etc.) The importance of having friends who can say, "you're an idiot - you don't understand X, Y, Z" is high. Sometimes I dislike when, at previous jobs, I've had to mask the truth simply to avoid hurting someone's feelings. Because, if you hurt someone's feelings, that person will close up to you.
brosco45 13y ago
Best way is to do away with review and go with equal profit sharing instead. You don't even need to worry about levels/title, just call everyone a Vice President.
moca 13y ago
This is absolutely great for Microsoft and its employees. Grade by curve creates internal friction that is harmful to the team. I am a manager in a large company. I always suggested to grade by performance against job level. There is written requirement for each job level, it is relatively easy to measure against the written description by both managers and peers. Everyone has incentive to get salary raise, bigger bonus, promotion. There is no need to use internal competition to add more pressure. On the other hand, the lower 5% people only cost about 2% of companies spending. It is not even worth to worry about it. You need to interview equivalent to 50% of employee count to replace that 5%, plus whole set of HR bandwidth to handle it. Microsoft has been losing a lot of value to fire lower 5% while keep a lower 5% CEO at the top for so many years.
ironchief 13y ago
By killing stack ranking, MSFT has taken low hanging PR fruit from the next CEO
- marshray 13y ago
  It may also take some of the pressure off of high-level people who previously had their rankings approved by Ballmer. (I don't have anyone specific in mind. Yes seriously.)
joeldidit 13y ago
I'm glad this happened. It was a completely necessary move. I hope it's not just a surface change while they twist things to keep it all going. Backstabbing and not collaborating to ensure you're not the one at the bottom of the curve is no way to work. And having to worry about and deal with backstabbers everyday quickly leads to a toxic work environment. Good riddance.

489 points by cnahr 13y ago

pmh 13y ago

Interesting timing given the article and discussion yesterday [1] about other companies using stack ranking. I wonder (and to some extent hope) that the others follow suit. [1]: https://news.ycombinator.com/item?id=6712717 https://news.ycombinator.com/item?id=6712717

dhyasama 13y ago
Especially interesting considering the author of that article works at Microsoft
- umeshunni 13y ago
  Yeah - as a manager, he probably knew about the changes a day earlier and hence decided a pen a post criticising other companies' ranking systems.
  - pagefault 13y ago
    Managers found out this morning. It's possible he was part of a pilot program and had early knowledge, but I suspect it's a coincidence. If anything, having early knowledge would likely have kept him from writing that until after the new Microsoft program was announced.

curiousDog 13y ago

Looks like the process will be more peer driven. There'll probably still be ranking to find the top performers rather than weed out the bottom 10, which is good.

ethomson 13y ago

This was seemingly inevitable whether this is actually useful or not. Microsoft has been getting increasing heat about our stack ranking system, both from employees and from external people. But I don't think stack ranking is our problem. I think our problem is that we value this notion of the brilliant and excellent individual contributor instead of valuing employees that value teamwork and team problem solving. I suspect this is an institutional problem, having been started by exactly that sort of person. It's this that causes the backstabbing and the mess that people attribute to "stack ranking". Until we put value in changing this culture, I don't see too much changing. (Disclaimer: my team at Microsoft is sort of odd - we're not in Redmond, and I don't see a lot of this backstabbing that is oft-reported. I do see our managers overvaluing the brilliant IC and I do see my organization undervaluing teamwork, but at least we're not doing that stupid game playing like joining weak teams to get great reviews.)

Zigurd 13y ago
I think that's an accurate assessment. It certainly wasn't stack ranking that made J Allard leave. Microsoft has an inward looking culture because there is so much money to play with when Microsoft launches a huge initiative like XBOX or Windows Phone. Google's "moon shots" and Apple's "hobbies" are not instant tickets to the top of the organization. Overlaid on those high-stakes struggles for control and prominence are some correspondingly huge egos, whence come dogmas like "Everything Windows." The Enterprise part of the company suffers less from this because the growth there is more organic.
r00fus 13y ago
Isn't it the case the stacked ranking exacerbated the backstabbing issue? I see this move overall as a positive one for Microsoft - without removing the perverse rewards to screw over your teammates and other teams, the actual cultural fix can't take place. I think the culture will shift soon - Microsoft, for more than a decade, had no real competitors. They made more money each year whether they executed (see Win2k) or not (see Vista). Consequently, their biggest threat was actually internal. Stacked ranking enforced this, and prevented internal response. Now that situation is changing (or has changed). Microsoft is looking at actual competition in the form of Apple and Google as mobile and search erode the desktop. On the datacenter side, Amazon and other cloud provider are threatening Microsoft's server profits. When the heat gets strong enough, there will be a unifying force within the company (or it'll just crumble - personally don't think that's the case).
- ethomson 13y ago
  My point was that no, I don't think stack ranking provides a greater impetus to backstabbing your coworkers than this sort of vague compensation model. In fact, I think a continuous model may lead to more backstabbing than exists now. Currently, I go into a bucket - let's say I'm a two, for instance - and all the twos get the same compensation. Can I backstab somebody so that I get a two and they get a three? Maybe. But if we remove the buckets and we have some continuity, where now if my coworker outperformed me and we were both twos... now this coworker just straight up outperformed me. I'm more inclined to want to stab that person in the back so that I'm better, since being almost as good isn't valuable anymore. Now, it's possible that we'll end up with stack ranking all over again. The previous compensation before the current stack ranking system put you in a bucket from 5-1 where 5 was good and 1 was bad. So... it turns out that we don't change this very much even when we do change things.

ujsfdo 13y ago

Bill Gates improved the world!

iancarroll 13y ago
Shoo.

Shenglong 13y ago

We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget. Is this not in effect the same as a curve? Giving higher bonuses to one person means giving lower bonuses to another. Giving everyone the same bonus discourages high performers from staying (and also working on the same team). People who receive little to no bonuses take the hint to leave, just as if they had received a 4 or a 5. Considering only 10% of employees receive a 4, and 5% receive a 5, I'm thinking that effectively, there has been no change.

robododo 13y ago
Yes, but there is no forced curve fit. A healthy organization will always "manage out" people who are not fit for the job. At Microsoft, folks are given the hint early enough that they can explore other internal options before leaving the company entirely. Though, to be honest, if someone just can't cut it, they will leave the company.
- brosco45 13y ago
  That's not how it works, the best leaves, the political ones stays. Microsoft is so toxic now it's hard to imaging them saving themselves anymore. Maybe if they fire all middle and upper management.
- amaks 13y ago
  "At Microsoft, folks are given the hint early enough that they can explore other internal options before leaving the company entirely." Except that it doesn't work. No internal hiring manager will ever allow the interview loop/transfer for the internal candidate with the score 4 or 5 (I think those are the lowest scores in the current model:-). In 99.9% of cases those unlucky who got 5 get laid off by the next review period.
  - robododo 13y ago

jrockway 13y ago

This sounds pretty good to me. If they actually implement what they wrote about here, I think Microsoft could become one of the better big companies to work at. (I have a friend who works at BofA. They wanted him to take on a new project that he wasn't interested in. As a reward for agreeing, they went back to his old performance reviews and changed them from "Meets expectations" to "Exceeds expectations" and then promoted him for excellent performance. LOL.)

joeldidit 13y ago

I almost wet myself.

gesman 13y ago

Stack ranking is created by management's inherent inability to trust people. And that, in turn, is created by management's inability to trust in their own abilities. This is proved to be true in case of Ballmer and overall Microsoft's performance while under his leadership. These changes are surely a positive sign for Microsoft.

jmspring 13y ago

An interesting read related to the topic -- Sinovsky on performance evaluation and large orgs: http://blog.learningbyshipping.com/2013/11/09/realities-of-performance-appraisal/ http://blog.learningbyshipping.com/2013/11/09/realities-of-p...

ffrryuu 13y ago

Microsoft is having a horrible time hiring anyone due to the stack ranking. The rot is now too deep.

Patrick_Devine 13y ago

This is good to see. The whole premise of stack ranking is fundamentally flawed. Clearly there is a curve that when applied to an entire population shows that there are under-performers. So far, so good, however, the problem is that stack ranking isn't applied to the entire population since it's impossible to normalize the performance of each individual. Instead, companies that stack rank do it on a team-by-team basis, which is a statistically inaccurate sample of the population where there can be a lot of skew. Since it's up to the manager to rank their employees, this causes a lot of problems. This is particularly a problem if the manager sucks at hiring, or over hires for their team, and there is a lot of chaff. There is a massive incentive to do this, because the more employees a manager has, the more corresponding perceived worth in the organization they'll have. Plus, if it comes time to cull, it's really easy to shield the favourite employees, even if they have performed poorly, without disrupting the organization. On the flip side, if you're really, really careful about who you bring on board, your team is in a weaker position because there is no one to terminate. This means you get rid of good performers based on bullshit metrics. I saw this happen at a largish virtualization company where one of the best employees on our team was let go because he had some minor HR-ish type issue. This caused a big percentage of the team to be demoralized and ultimately leave.

nikatwork 13y ago
Sounds like an evil but effective way to combat the BS of stack ranking - keep a couple of obviously subpar staff chained up in the corner ready to be sacrificed at the review altar then replaced. Honestly, I can see the benefits of SR as a once off "clear the decks" purge, but as a continual measure it's insanity.

DenisM 13y ago

If I remember correctly, they promised that before, and all that came out was that "the curve" was still there, but hidden from sight and under a different name.

san86 13y ago

I kinda like what my employer does. There is a 1-5 ranking, but the distribution/buckets for bonus is determined after the reviews are complete. Of course, the concern here is that management "can" slot the buckets in a way that suits them, but I trust them enough to not do that.. Due to this, no one knows "what needs to happen to get X bonus".. everyone is just trying to do their best to get to the highest score and the amount of cash you get depends on what bucket you fall under

Ensorceled 13y ago

One major thing I learned from 360 reviews is how bad developers are at judging each other or their manager. I've had employees on probation for lack of productivity judged as excellent by their peers because of their ability to socialize their "abilities". I had the best developer on my team (a 10x developer if ever there was one) get slammed on technical ability rankings because of his prickly personality. My VP and I used have quite the chuckle at all my "strengths" identified by my team and peers ... because they liked me and I was effective they attributed positive characteristics to me that I did not have.

ddoolin 13y ago
I've always been highly sociable compared to my other coworkers and have also noticed I get attributed things that weren't really accurate. Notably non-technical coworkers seem to think I work at break-neck pace when I really just work at pace with everyone else, most likely because I actually talk about what I'm doing with them more often.
YZF 13y ago
360 isn't perfect but it's better than the alternative. You're basically saying that those who worked daily in close interaction with the 10x developer and had to work with the code that developer produced, had lower regard for his technical ability than a manager who presumably is further removed? You can't ignore the social aspect. A team with social frictions isn't going to work as well as a team that enjoys working together. Obviously just being social isn't enough but a strong team needs a combination of the social and technical aspects. Also 360 should mean going beyond the team, so the manager should be evaluated by his peers, his managers and his team and technical people on the team should be evaluated by members of other teams they work with.
- Ensorceled 13y ago
  Yes, I know what a 360 is, I've participated in them. In the situations I indicated I was also a developer on the team so I knew how productive and skilled the 10x prickly developer was. His peers ranked him high on technical skills but only as high as more amicable and lessor skilled peers. I'm not saying I ignored the social aspect, in fact that is why I called him "prickly". I'm just saying that, while his teamwork related areas were properly low, his technical areas were improperly low because of this halo effect.

alkonaut 13y ago

I wasn't aware that US companies ranked employees and used rankings when purging the workforce (when I think about it it's a pretty obvious idea). In countries with stronger labour laws "underperformance" basically isn't a reason to fire someone. The employer is responsible for the employees performance (training etc.). This can be frustrating in the software business when just a few really poor performers can really sink a team. Obviously forming a really elite team in the US is easy, since you can purge from the bottom, provided you don't affect morale too negatively. But how do you do it in countries where firing for underperformance isn't an option? It's really hard to get away from a bell-curve team.

sib 13y ago
"In countries with stronger labour laws..." Interesting. I would refer to those as countries with "weaker" or "perverse" employment laws...
- cesarbs 13y ago
  I think that's really subjective. There are always ways to abuse any kind of system. Take for example working hours. A country with strong labor laws will usually prohibit employers from making employees work more than x hours a week, and if they do that they have to pay for overtime. That will make some people happy and productive because they will feel safe having protection from the system. But some people will abuse it and slack off. On the other hand, if you don't have control over that you might end up in a situation where people are only considered good employees and productive if they work crazy hours all the time. Instead of being abused by employees, the system will be abused by the people at the top. And I guess that covers underperformance. Who defines what bad/average/good performance is? Is the guy who does really good work considered to be underperforming just because he works 9-5 and wants to spend quality time with his family instead of making the office his second home? That kind of thing has to be prevented by law.
- Brakenshire 13y ago
  Can we drop the manipulation of language? Strong is obviously equivalent to strict, the meaning is clear-cut. It's not difficult to use these words and disagree with the principle they describe.

anmalhot 13y ago

i hope this will curb people from constant backstabbing that I witnessed during my short duration there. It was painful to watch very smart, bright people indulge in really pathetic behavior consciously to 'protect' themselves..

j_baker 13y ago

The last bullet point strikes me as incredibly odd. No ratings? How will managers determine raises and bonuses if they don't have a rating to determine whether the employee is meeting expectations or not?

waqf 13y ago
You're asking how managers will be able to freely assign numbers to individuals according to their performance, without being guided by numbers that the same manager previously freely assigned to the same individuals according to their performance?

mkramlich 13y ago

Good for them. I don't like Microsoft but I like to see any company getting smarter. It's hard enough as it is to find and keep good people. And there are pretty obvious alternate ways to identify and expel "dead wood" if that was their original justification for stack ranking.

Todd 13y ago

This is a great move for the company. Especially now that so many competitors have internalized the process. It was the single most identifiable thing that poisoned the culture at the company. It will be interesting to see what they replace it with. The process certainly made it easier to make decisions higher up the chain (even if it was difficult for the managers and their direct reports).

SubuSS 13y ago

>We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget. The compensation budget is the key part here. I don't know how this is going to account for: - Failed products with smart developers and their retention. - Avg products with very smart developers - Less 'visible' projects. Those that management don't realize is necessary until you have no one working on it. (This happens a LOT in big companies). All this can be solved by pumping a ton of money into this as they are alluding elsewhere though. Overall the fact that they are taking feedback seriously and are working towards a solution is pretty positive though.

jasonculbertson 13y ago

I saw the downfall of stack ranking immediately after a company I worked at was acquired by Microsoft. The workplace changed within a month from one focused on teamwork and support to Lord of the Flies. When the only way you can succeed is by being "better" then someone else you are forced to step upon others. I believe that this is also the effect of working for a public company with a stock that hasn't moved in price in 10 years.

nikatwork 13y ago
Seen the same - work turned into a Survivor gameshow. Instead of concentrating on the product, everyone formed alliances and ganged up on the less-liked people. Everybody was so focused on politics nobody cared about the product anymore. Then the product died. I still don't think our MBA execs learned a damn thing from the whole fiasco, I'm sure they're somewhere else getting paid big bucks to run some other poor teams into the ground.
- VodkaInferno 13y ago
  I've seen this a few times at MSFT. Except that the product didn't really die because nobody wanted to take responsibility for the actual killing. And every now and then there would be a re-org, the former exec would "move on" to his next atrocity and a "recycled" exec would go in front of the team and declare his passion for the product and that this time it will be different.

mathattack 13y ago

Now that they get rid of it, I wonder if they're going to run into problems on the other extreme... - Difficulty knowing who the best employees are. - Employees surprised by layoffs. "I thought I was doing well." - Managers slacking on giving constructive feedback. Performance management is such a tough subject. Both extremes (ruthless stacking, and no-curve) have issues and I don't know a better solution.

pagefault 13y ago
Part of the new program is an explicit focus on frequent feedback. If anything, there ought to be fewer surprises than the current once (twice-ish with midyear discussions) a year feedback. The risk going forward is that without being forced to a distribution, wishy-washy managers will trend towards the middle. High achievers will be under-compensated, and under-achievers will be overcompensated. The budget hasn't changed, so the same pool of money has to be divided among the same set of people, managers now have more freedom as to how.
- mathattack 13y ago
  My experience is that wishy washy managers make everyone top rated, therefore nobody is really top rated.
  - pagefault 13y ago
    If everyone gets top rated, then the budget gets applied, everyone gets middling awards. Same result as rating everyone middling in the first place.

bmohlenhoff 13y ago

It's nice that now they are going to value teamwork and collaboration more highly, but I don't see the lack of a curve making much of a difference in compensation level for the average contributor. The total size of the compensation budget is fixed, and they have to spend all of it. Just because now 30% of the staff can fall into the Exceed Expectations bucket doesn't necessarily mean that the budget increases. The money gets divided differently, that's all. It does seem like a positive change though if they can improve the culture of the workplace and minimize the amount of backstabbing, cronyism and political nonsense.

fluxon 13y ago

This is interesting in the context of https://news.ycombinator.com/item?id=6712717 https://news.ycombinator.com/item?id=6712717 "Why are Amazon, Facebook and Yahoo copying Microsoft's stack ranking system?" - the feature copying usually goes the other way.

cykho 13y ago

This is going to open the floodgates of deadwood. Stackranking at least forces hard choices. They just needed to adjust the curve by team performance. E.g. rockstar teams have more exceeds than underperforms and a failing team has more underperforms than exceeds. Under the most recent system the best way to get a review is to be an A player on the B team.

mbesto 13y ago

Curious - what's the origin of stack ranking? Was there any science (psychology/sociology) behind it?

nness 13y ago
I'm not sure how it was developed, but its popularity is credited to Jack Welch, who introduced it to General Electric in 1980. In doing so, GE experienced a "5-fold increase in revenue": http://en.wikipedia.org/wiki/Vitality_curve http://en.wikipedia.org/wiki/Vitality_curve
- marshray 13y ago
  In 1980 President Reagan was elected. In addition to many technologies (e.g., LSI ICs) coming online, the amount of taxpayer debt that the US government funneled into our industrial sector over the next few years was simply staggering. One should look at where this revenue was coming from and compare GE to other companies in the sector (i.e., other makers of nuclear reactors and jet engines) during this time before drawing conclusions about personnel management theories (of all things).
michaelt 13y ago
I've heard it attributed to former GE CEO Jack Welch [1] who is apparently Fortune magazine's Manager of the Century. In terms of hard science, unfortunately blind randomized controlled trials are impossible, so it's not possible to definitively isolate causal relationships and confounding factors. "It seemed to work for GE in the 1980s" is the best that's on offer. [1] https://en.wikipedia.org/wiki/Vitality_curve https://en.wikipedia.org/wiki/Vitality_curve

tn13 13y ago

No one actually says stack ranking is bad. But in reality it is very effective in getting rid of few troublemakers.

marshray 13y ago
I'll say that stack ranking was bad and any US company can fire troublemakers without it.

kmeredith 13y ago

I'm a big fan of Dale Carnegie, http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influence_People http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influenc.... But, I think that leadership/true emotional control means that, even if someone is treating you wrongly or criticizing you, you can dissect the behavior, and then appeal to reason. For example, I appreciate, and even invite, ruthless criticism ("go ahead and insult me if necessary") when getting feedback (on my code, performance, etc.) The importance of having friends who can say, "you're an idiot - you don't understand X, Y, Z" is high. Sometimes I dislike when, at previous jobs, I've had to mask the truth simply to avoid hurting someone's feelings. Because, if you hurt someone's feelings, that person will close up to you.

brosco45 13y ago

Best way is to do away with review and go with equal profit sharing instead. You don't even need to worry about levels/title, just call everyone a Vice President.

moca 13y ago

This is absolutely great for Microsoft and its employees. Grade by curve creates internal friction that is harmful to the team. I am a manager in a large company. I always suggested to grade by performance against job level. There is written requirement for each job level, it is relatively easy to measure against the written description by both managers and peers. Everyone has incentive to get salary raise, bigger bonus, promotion. There is no need to use internal competition to add more pressure. On the other hand, the lower 5% people only cost about 2% of companies spending. It is not even worth to worry about it. You need to interview equivalent to 50% of employee count to replace that 5%, plus whole set of HR bandwidth to handle it. Microsoft has been losing a lot of value to fire lower 5% while keep a lower 5% CEO at the top for so many years.

ironchief 13y ago

By killing stack ranking, MSFT has taken low hanging PR fruit from the next CEO

marshray 13y ago
It may also take some of the pressure off of high-level people who previously had their rankings approved by Ballmer. (I don't have anyone specific in mind. Yes seriously.)

joeldidit 13y ago

I'm glad this happened. It was a completely necessary move. I hope it's not just a surface change while they twist things to keep it all going. Backstabbing and not collaborating to ensure you're not the one at the bottom of the curve is no way to work. And having to worry about and deal with backstabbers everyday quickly leads to a toxic work environment. Good riddance.