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 ...
I’ve personally seen this happen to several very good employees,
they just wanted to keep their head down, work hard, be diligent, get the job done, now that’s not enough, they have to play office politics or fall behind,
Collaboration is also the means by which mediocre and lower performing employees (”teammates”) can ride on the coattails of real high achievers and performers. If “everyone gets a trophy for trying their hardest, gosh darn they ought to share in the winnings too” is the new group-think pervading our corporations. Sorry, this approach is in direct conflict with my capitalistic heartbeat so I will speak out against it. “Rank and yank” does work if it is not corrupted by the PC police and group-thinkers. The primary focus of the approach is to tell the employee where they stand in relationship to others - sadly, managers are not taught honesty skills and those that struggle with telling the truth will never be able to use the system as it was designed.
Our schools used to teach about independent excellence and achievement and instead, the schools are turning out dumbed-down, group-think idiots that can’t process on their feet or use critical-thinking skills. Businesses use it (collaboration and small groups) because that is the caliber of people they are getting from the system and it almost like a new sub-culture with its own language and thought processes.
Think about it: “one Apple product”. That’s not good.
When I get commercial loans for expansion the 1st question is, how diverse is my companies income stream? Extremely important to the banker that we have sales to more than just one distributor.
Excellent comment. Just struck me that these sorts of "by the numbers" approaches to management have a lot in common with "zero tolerance" policies in schools and elsewhere. They relieve weak managers of the responsibility for making decisions.
There is a Biblical principle at work here. If you want to be the most successful, you place others (your customers) first, and they will value you more than the others (your competitors) who place themselves first...
It really works just about every time when you are dealing with normal, generally honest people.
The stock price would be about $40 or so, then split. This happened four times while I was employed there. Then came Obama butt kisser Immelt who wiped about half of that wealth away for good.
And thanks to all, what a fast-growing discussion!
That's how you get to be number 1.
“one of the most powerful things about a well managed small business is the team spirit and flexibility to get things done on a moments notice. Priorities can shift due to the demands of the marketplace”.
So true. I only have three employees, but they flex and pivot to keep the products moving to the customers at a moments notice. We do online, store direct and wholesalers and each week is a new challenge because they are never the same. All three are women and work together amazingly. I’d be lost without them.
I use Microsoft products and the company indeed seems bent on self-impairment.
But I also keep an eye on Slate and Vanity Fair (just as I tune into MSNBC on occasion, to see what the enemy is up to) and they are both singularly devoted to destroying others, specifically conservatives, Christians and anyone who individually achieves.
I recognize the difficulty when the performance measurement is ambiguous at best, but how do you rate their performance and how do you remove the real slackers from the workforce? How do you justify giving one employee 4% and another one 2% or 0% raise (assuming you can even give out raises)?
I guess it's the eternal question in the business world.
Not much of a contribution maybe, but that man’s face (at the link)
looks evil, and scares the crap outta me.
What I wanna know is if this is a story with a happy ending?
Thank you, Baloo!
Do you think the Little Frog will learn?
I've seen that in action - except that they then "team" up a misfit with someone that presumably has a clue in an effort to cover for the misfit's poor performance. The result - the productive team member (and I use the word "team" loosely) more often than not is pulled down to the misfit's level when they find out that their performance rating (and raise) is gauged on the performance of the team rather than the individual. It falls generally under the heading of "why should I bust my butt to do right when this idiot next to me gets the same thing I get for doing nothing (or worse than nothing)".
I meant to add, the bank also want to know how many products are top sellers.
The classmates who did complete projects with me thanked me for showing them how to do team projects correctly, how to make the assignments and schedules, and how to turn out the best product. In the end, it wasn't reading the management books that got them ahead, it was having someone who could show them how to actually make collaborating work.
HR is a poison unto itself which has risen primarily because of government regulations and oversight, i.e. "quotas", and lawyers and unions, i.e. "discrimination" lawsuits.
Very often, the very people who are hired into and staff these economically useless HR positions are chosen because they are the very target groups meant to benefit from those skewed policies and not because they add any particular value to the company. They therefore perpetuate the poisonous system of embedded discrimination and mediocrity with a vengeance.
The HR Department is a millstone around the neck of any company who has one.
Whenever they came up with a good idea, I credited them.
Why? Because I was confident in my skills.
Same here - “There is no limit to the amount of good you can do if you don’t care who gets the credit.”
SALES: Heck, we'll pick your boat up and lay it down like a baby, right where you want it. This is the Cav boy -- airmobile. I can take that point and hold it as long as I like -- and you can get anywhere you want up that river that suits you, Captain.
ACCOUNTING: I don't know, sir . . . it's . . . it's . . . .
SALES: [aggressive] What is it?
MARKETING: It's hairy in there . . . it's Charlie's point.
SALES: Charlie don't surf!
darn, “martial,” I always screw the two words up, they’re the same, anyway
“On the other hand, while MS might not be as profitable, they do have the best and largest portfolio or products in the IT market, for corporate and consumers...
While MS might not have the “coolness” factor working for them as do Google and Apple, it is operating with a much more mature approach to being a major player in all sectors of the tech market.”
I’ve stuck with MS since 3.1 but Win8 is my breaking point. After 2 months of having a worthless computer, I finally broke down and bought my first IPad.
MS turned me into an Apple customer. They have nobody to blame but themselves.
The predictions of Apple’s demise have been almost nonstop since the 1980s. They were especially loud in the 90s. Of course, they were all wrong then. Who knows what will happen in the future. But based on the accuracy of the predictions in the past, there’s a good chance that Apple will be around for a long time.
iPhone sales were up 20% in the most recent quarter. That’s what this conversation which you started was about. Apple’s iOS is about 13% of all smartphones sold.
Windows phones are 3.7% of the world market, although it is second behind Android in the Latin American market — not much economic growth there for some reason. Brazil has tariffs on the iPhone, because that’s where the money is.
Android OS is sold on a lot of platforms, some of which actually have survived long enough for the manufacturers to intro an updated model. To get a look at really inexpensive Android tablets, it’s easy enough to go to a Big Lots, and there are even more available on the Big Lots website. The big growth area for Android may be in Chromebooks, which are a notch up from trying to use a tablet, at least for us older-timers. The main problem going forward will be to maintain interest by hardware manufacturers.
The funk in the tablet market (declined in the most recent quarter, but that was up half again over the same q of last year) is attributed to the lack of a new iPad model — there appears to be an autumn rollout in the offing, sufficiently ahead of the 2013 Christmas season, and to include an entry-level iPhone intro, and an iPad refresh, and perhaps one more thing.
As I said above, the smartphone market has grown — in large part thanks to Apple — and Apple’s market share has shrunk, and its profit margins have naturally declined, but the number of iPhones sold has not declined. Also, Apple is the number one seller, and the current iPhone model is always the largest selling smartphone, period.
Microsofts new online software has almost done me in. They charged me 10 what they should have and didn’t care. Did it four months in a row. Next to impossible to get out of the contract as well.
I didn't know that. Rank and rank seems to be the opposite of W. Edward Deming's philosophy. I wonder if anyone notices that liberals tend to make very successful entrepreneurs, which is fine with me as long as they stay out of government.
The good ol’ Bell Curve. Something that describes genetic distribution has been foolishly compared to human behavior. This is a result of the idiotic idea that intelligence and behavior are genetically transmitted. As a result companies that are stupid enough to employ psychologists come up with stupid bell curve based rating systems.
You can have a crew smart guys and you can have a crew of dolts. The idea that the chief dolt deserves a bonus and the guy who is not quite as smart as the others, though he is still a brain, deserves to be fired is itself stupid beyond belief. Anyone who uses such a system is a bad manager. This is obvious because the companies that use this system struggle and fail.
If anyone thinks that there is any validity to the bell curve ratings system remember that it is used by the Federal Govt. It is laziness personified.
This is a useful reminder that Welch did do a number of things that strengthened GE. His Mantra of #1 or #2 or get out was smart for the legacy businesses. Stack and yank was not so smart because it was way too mechanistic and assumed managers were themselves competent to make the judgments. As I said earlier it also presumes the organization is able to identify talent and allocate that is at least as productive as that which is already in the organization. The point of diminishing returns is reached pretty quickly in many organizations.
The real-life translation of this:
In school projects ("groups"), two members of a five-member group do all the work, and the other three show up at the last minute to claim the credit.
In work situations, see above.
When my kids were going through school and had “group projects” coming up, I told them to always try to team up with Poindexter and just tell their friends they’ll catch up with them after school. Get the ‘A’.
The six stages of a project
4. Search for the guilty.
5. Punishment of the innocent.
6. Rewards for the uninvolved ...
In general, Ballmer's ideas about management would find no takers in that group; the ideas they were promoting were all pretty much 180-degrees opposed to what the article you've posted here describes.
Bingo! Apples and oranges.
Had a world history professor in college and he was demanding. Liked the challenge so worked to get an “A”. Everything I did was graded as an “A”, quizzes, testes, final; never missed a class, and dominated discussion in class. He gave me a “B”. I asked why? He said he only gave out 2 “A’s” in his career and they both were to Fulbright scholars and I was not a Fulbright scholar. Felt like telling him to take his “B” and shove it up his “A”.
I got my first Iphone (4) recently because Verizon is giving them free with a two-year. I imagine they are counted as “sales” and may be skewing the stats.
I’m old-fashioned. I think collaboration is best taught on playing fields and other non-academic venues. It’s actually a dangerous crutch when thinking itself is the lesson.
Dude, everybody on the Internet knows how to run a multibillion dollah company like Apple, Microsoft, Kodak, GE.
It’s our loss that they are not running one.
“Me thinks that your just an Apple cultists that took the opportunity to bash MS.”
Nope. The IPad I bought a few months ago is the first major Apple product I’ve owned. Even my cell phone is a Galaxy 3S w/ Android. I’ve never owned an IPhone and never cared to do so: the screens are way too small.
I’ve used MS for 20 yrs. Win8 is a break point. On my Win8 brick of a laptop, I have classic shell and it helps, a little.
But whenever I do something like start a pic or music file and forget to use a different product than Win8, it takes me right back to Win8 hell and I have to keep moving my cursor off the screen to the right until I can get a menu screen that will take me back to classic shell. It’s too much of a hassle.
No sir, there are more things in the world wrong with Win8 than can be fixed with classic shell. I hear that, if you have a professional version, you can opt back to Win7. I just have an off-the-shelf consumer laptop that was brickified by adding Win8 to it. If I could do so, I would revert to Win7 in a second.
Instead, I’m now for the first time, using an IPad.
You - and MS for all I care - can dismiss the real complaints of tried and true customers as just Apple aficionados in disguise if you like, but MS lost a long term customer here and I doubt I’ll be back for Win9.
Here’s the real problem, in a nutshell: MS doesn’t care about me as a consumer because I’m not a company or professional sale; sales to individuals are an afterthought because they have a captive audience in off-the-shelf computers.
Except they don’t.
Yep, especially if the rating standards are subjective so the manager can play favorites and take care of his butt kissers.
I just spent three hours fixing a performance problem on Win7 yesterday due to some Microsoft installed "features" that behaved indistinguishably from malware.
There were thousands of complaints about related issues on MS' website without a hint from MS about how to fix it.
Sorry, but most of Microsoft's products are a POS. They're great for 'toy' applications that you can quickly prototype something with-- but try a real world app with load and you'll spend an endless amount of time trying to figure out how to 'tune' Windows because you have no idea what MS' software is doing (or failing to do) behind the scenes.
I think that's true. How many businesses of a certain size do NOT have an HR Dept? Any?
I think it's partly the mindset of many businesses that "expertise," however defined, is valued. The thought is that hiring and managing people is such an important function that we need "experts" which is in this case HR professionals. The results speak for themselves.
However, HR depts. serve a much more important function for a company...they PROTECT THE COMPANY FROM ITS EMPLOYEES.
I believe the #1 priority of any HR Dept is...don't let us get sued. So there are all kinds of methods and processes for hiring and firing that are legally sound but functionally null (at best).
I’d be running one, but my job was destroyed by a combination of ATMs and ethanol subsidies. /zing /zing
Built-in backdoor: German govt warns of significant Windows 8 security danger
Except...there’s a strong correlation between the timing of the success enjoyed by Apple...and the presence of an employee named Jobs.
I think there was an article about Ballmer’s upcoming retirement, and this article seemed like a nice companion piece. I don’t think much of his management approach, but we need to remember than Microsoft was handed over to him by its founder, and doing the old me-too approach isn’t in the bloodstream of the small number of people who manage whole companies. He wasn’t there to see the reasons that things had gotten to where they were, which must have been a problem for him, even if he wasn’t aware of it.
Church management is different, not just due to the budgets involved, but also in the way in which income is generated. Typically the local churches have longterm participation by an ever-transitioning (that is, they die) board, all of whom know each other.
As long as they don’t do anything daffy like spend $20K on a networked copier/printer/fax/scanner/document server (the latter of which rarely works) for use by the very small staff that works in the office, and keep recruitment efforts high (that’s more important now than ever before), they should be all right.
Good points. If "management" was doing their job in hiring, they would be getting the people at above average on the curve. There wouldn't be a group of dolts to evaluate....maybe the managers are the problem, not the employees....... Naaah, couldn't happen, let them fire 5% of their employees every year and get a big bonus and big stock award, after all, they are "management", they are special...their bosses have said so.....