Skip to comments.The Poisonous Employee-Ranking System That Helps Explain Microsoft’s Decline
Posted on 08/25/2013 6:24:11 AM PDT by SunkenCiv
There were many reasons for the decline of Microsoft under Steve Ballmer, including, as I wrote this morning, its lack of focus and its habit of chasing trends rather than creating them. But one thats not obvious to outsiders was the companys employee evaluation system, known as stack ranking. The systemand its poisonous effects on Microsofts corporate culturewas best explained in an outstanding Vanity Fair feature by Kurt Eichenwald last year...
So while Google was encouraging its employees to spend 20 percent of their time to work on ideas that excited them personally, Ballmer was inadvertently encouraging his to spend a good chunk of their time playing office politics. Why try to outrun the bear when you can just tie your co-workers' shoelaces?
Microsoft wasnt the first company to adopt this sort of ranking system. It was actually popularized by Jack Welch at GE, where it was known as rank and yank. Welch defended the practice to the Wall Street Journal in a January 2012 article, saying, This is not some mean systemthis is the kindest form of management. [Low performers] are given a chance to improve, and if they don't in a year or so, you move them out. "
As the Journal and others have noted, what seemed to work for Welchfor a time, anywayhas produced some ugly results elsewhere. Even GE phased the system out following Welchs departure.
(Excerpt) Read more at slate.com ...
Microsofts Lost Decade
Unintended consequences ping.
Oddly enough, I have seen a real steady decline in how well people can collaborate. Some folks insist on being the star and want every decision made by the group to be the decision that seems personally best to them. "Compromise? Support others? Why would I do that?? We need to do it my way." Others, of course, want to kick back and let others do everything. "You guys are great. Keep doing what you're doing. I'll be over here surfing facebook."
It's hard to be a good leader. It is also hard to be a good follower. Collaboration is about knowing how to do both.
Collaboration is hard. You might think that schools teach people how to collaborate, but I think somehow the opposite lesson is being learned.
Slate, Vanity Fair..... outstanding sources for how to run a business.
Neither is worth the powder to blow it to hell
For every collaborative pack there is leader. Akela is to be followed.
A system in which excellence is rewarded and incompetence is marginalized is not necessarily a bad thing, is it?
During my first year of college, back in the 70’s, I got all “A’s”.
Then the whole system switched to a Pass/Fail model. Show up- you pass. Don’t show up- you fail.
So boring, stupid and useless, I quit, got married, became a full time musician.
Like every idea, each is applicable in certain circumstances and not applicable in others.
Stack and Yank is good if you are turning around an old ossified company like GE was when Welch got it. It was filled with “deadwood” that needed to be cleared out and Stack and Yank applied.
But when you have a relatively young workforce in a young company like MS, there is not that much dead wood that needs to be cleared out.
The company I work for did this for about 10 years. The idea was cut from the bottom and add to the top. Everyone had to be ranked like in a totem pole, one higher or lower than someone else in your org. If you worked in an org of superstars you were in big trouble. I know alot of very good people who were let go because of it. They stopped about 10 years ago because everyone but HR hated it.
Jack Welcch is a 24x7x365 d*ck. Not only did he poison the culture at GE he was the pioneer of outsourcing and the wedding of GE TO THE watermelon Marxist movement. Children die when he talks.
Very silly system.
Tech companies quite literally ARE their people and the innovations they produce. They have nothing else to sell. Sticking them into a somewhat toned-down version of Survivor is not a wise decision.
A recent class communicated through facebook (quite openly) and they all (100%) showed up for the final exam and sat in the hallway. No one took the test. Everyone got an "A".
The teacher was honest and consistent (but has probably since altered his policy).
The class was clever and showed good collaboration.
But the overall lesson is that "gaming the system" is the way ahead -- and the problem at Microsoft -- and achieving excellence is just not necessary.
The problem with these systems is that it isn’t always excellence that is rewarded, more political skill, as is noted in the article. Managers can successfully use these systems to harm employees they don’t like, whether the employee is a performer or not. And in the case where I work, there is great pressure to classify at least 10% of staff who as underperforming, whether they are or not. It ends up resulting in someone being screwed every so often because it is “their” turn.
Other staff notice that on years when they really go all out, they get a nominal review. The next year, doing the normal day to day work, they get promoted.
Best boss I ever worked under (in many ways, worst in others) had a simple philosophy. “I am the Law”.
That said, he encouraged us all to challenge him every step of the way with our own ideas. He was smart enough to understand that surrounding yourself with the expertise you lack, works when you listen to it.
But when he made his decision, there was no further debate wanted. And he achieved much success. Did I mention we didn’t create a problem by hiring idiots to begin with?
“Collaboration is hard. You might think that schools teach people how to collaborate, but I think somehow the opposite lesson is being learned.”
I agree with you. Having worked in both small entrepreneurial businesses and large corporations, one of the most powerful things about a well managed small business is the team spirit and flexibility to get things done on a moment’s notice. Priorities can shift due to the demands of the marketplace and a small business, at the direction of the leader, can shift focus to capitalize immediately on opportunity or respond to a customer problem. Large businesses, with many layers of management and job description defined limits on freedom of action have a much more difficult time making decisions and responding, even when a shift is mandated from the top.
As you described, collaboration is hard, even without the politics and rules of a large organization. Leaders of big companies talk about the need for collaboration, flexibility, and entrepreneurship but they rarely invest in training employees how to collaborate. Collaboration requires a high level of trust and if the corporate culture does not inspire trust, employees will not collaborate. Certainly the Steve Ballmer and Jack Welch forced ranking performance systems does not work well with teams whose total output can be measured but the individual contribution to the team effort is difficult to discern objectively.
Office Politics is POISONOUS.
I was relating my own experience.
I wish the company I work for would stop it. The horror stories of what happens in the management meetings where the ranking is determined is unbelievable. Every misstep an employee makes is discussed, aired.
I use Openoffice and Codewrite and.... well, Microsoft’s products have been second rate about forever.
“You might think that schools teach people how to collaborate, but I think somehow the opposite lesson is being learned.”
Schools are teaching equality and every opinion is as good as the next. This also means EVERYONE IS A CHIEF AND NO ONE SHOULD BE AN INDIAN.
The only problem is that when everyone is a chief, there is no collaboration.
What needs to be taught is that if someone is better than you, that guy gets to be the chief and you are the indian. When you improve enough to be the chief, you get to be chief. The problem is, most of the kids should never be chiefs and that would damage their self esteem. The parents of the persistent indians will also come down on the teacher too.
In most self evaluation surveys, about 90% of the students rate themselves as “above average”.
Most adults when rating themselves on a scale from 1-10 rate themselves a 7.