Microsoft will end the practice of ranking workers against each other. The system had been long been the object of criticism, and its been blamed by some for causing Microsoft to fall behind in innovation.
Under stack ranking, managers each year were required to put set percentages of their team’s employees into one of five groups, ranging from top performers to bottom performers.
The ranking affected everything from promotions to bonuses, and underperformers typically ended up seeking jobs in other parts of the company or elsewhere.
Even if all members of a team performed well that year, the manager was required to designate a set percentage as underperformers — a practice that drew fire from employees. Many thought the system rewarded internal politicking, withholding of information and back-stabbing, rather than rewarding innovation or cooperation.
That review system has been blamed by some for causing Microsoft to fall behind other tech companies in the past decade in key areas such as mobile computing.
Evidence that while competition among employees can maybe boost creativity and innovation, that effect is negated by the impact of arbitrarily punishing some percentage of your employees.
You’d think this would be obvious, but I imagine M$FT implemented this scheme around the time I/O psych consultants and Six Sigma-like programs were attaining popularity.