Jeanne Farrington

How about we….

1. Hire the best and the brightest people we can find to work in our company and then…
2. …tell the vast majority of them that they are “Just Okay”

Hire the Best & Brightest & Then Help Them to Flourish

That’s what happens when companies evaluate employees using “stack ranking,” a system that forces managers to slot certain percentages of their people into performance ratings with names sort of like “Really Great,” “Pretty Good,” “Just Okay,” “Not So Hot,” and “Pretty Darn Useless.”

Typically, these systems allow a manager to give one employee the “Really Great” rating, force most of them into the “Just Okay” rating, and come up with at least one employee who is “Not So Hot.”

From the employee’s point of view, this translates to an A, B, C, D, F kind of grading system.

So, what if we hire the best and brightest and then give most of them “C’s” at review time? What could possibly go wrong?

1. Half a Good Thing. The manager will be forced to have at least one “constructive feedback” session with at least one employee… the one (or few) with the “Not So Hot” rating. This might be a good thing, although why we’d want that manager to wait until review time to point out areas for improvement is hard to fathom.
2. Employees hate it. Great employees who receive “C’s” (most of them) feel bad. Discontented. Disrespected. Discouraged. (Remember, these are great people who have been doing good work & we just told them they were mediocre. No matter how often HR says that the “Just Okay” rating is really “Okay,” nobody believes that. )
3. Managers hate it. They don’t want to tell their great folks that they are “Just Okay,” either.
4. Competition Takes Over. Employees compete for the few top spots. As a consequence, they are far less likely to collaborate or be great team players. Instead of focusing on what can make the company great, they’ll focus on how to outshine their colleagues.
5. It’s All About Me. Employees try to impress their managers rather than actually doing great work. Plus, people who do great work but don’t toot their own horns are likely to lose in the ranking game.
6. Creativity suffers.
7. Productivity suffers.
8. Turnover flourishes. Good people leave the company because who wants to work in an environment like that?

So what to do instead? Here’s my favorite thought so far:

Set a high standard and then do what makes sense to help everyone to meet it.

The boss’s job is not to evaluate. The boss’s job is to make everyone a five.

– Samuel Culbert
UCLA Anderson School of Management

Resources

Article | A CEO’s Passionate Defense of “Stack Ranking” Employees

Article | Marissa’s Second Epic Fail: Microsoft Abolishes Stack Ranking As Yahoo Ramps It Up


Article | Microsoft’s Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant


Article | Why Stack Ranking Is A Terrible Way To Motivate Employees

Article | Microsoft Abandons Dreaded “Stack”