

Tales of an Ex–Microsoft Manager - sprague
http://www.slate.com/articles/business/moneybox/2013/08/microsoft_ceo_steve_ballmer_retires_a_firsthand_account_of_the_company_s.html
Pretty accurate summary, from a manager&#x27;s point of view, of how performance ranking happens at Microsoft.
======
hga
Here's a commentator at Mini-Microsoft explaining why it probably became more
toxic over time, and it looks like these changes happened before the author
arrived:

[http://minimsft.blogspot.com/2013/08/steve-ballmer-is-
going-...](http://minimsft.blogspot.com/2013/08/steve-ballmer-is-going-to-
frickin.html?showComment=1377372530878#c2642513338204621608)

Anonymous said...

My memory is really good - [ current head of HR ] is the one who did away with
the "life-time performance average" which let people take huge risks and made
Microsoft great.

THAT, was huge BillG wisdom. You could look at your score over time and do
some really simple math to see what kinds of risks you could take. And then
suddenly, a 15-year running average of 4.0 turned into "your current manager
doesn't like you, and he's required to fire one of his 10 no matter what, so
you're fired".

She also did away with the standing rule that you could take any written
standing offer - NO MATTER WHAT (unless you were actually fired for cause) -
which was Bill's way of ensuring that great engineers couldn't be tossed out
by one horrible ass-kissing manager ... which is pretty much all of them
today.

The day that it became possible for a single crappy manager to fire someone
for saying "I disagree", or "That's Wrong". Microsoft died.

And when's the last time you saw that lovely deck of laminated cards that
started with "a passion for technology" ... and a really logical employee
development plan? yea, right, somewhere around 1995.

[ People who need to leave. ]

~~~
vonmoltke
I think the problems started when they hit their monopoly phase and Windows
became a cash cow. It probably looked at that point like they had "won" and
all they had to do was keep the upgrade chain going. Don't need to innovate;
that would rock the boat and risk the cow.

~~~
Jare
Strictly speaking, a monopoly / cash cow phase creates a context in which bad
practices will not kill your company and are not removed by natural selection.
It allows these bad practices to survive and thrive, but it does not create
the practices themselves.

I think the distinction is important, because removing the cash cow will not
fix the problems, but instead let these problems run the company into the
ground. RIM is probably a perfect example of this process, and Microsoft is
not, which gives credibility to the idea that, for all its failings, Microsoft
has in fact been able to embrace a number of innovations and new markets
(Xbox, Azure, enterprise...).

~~~
joe_the_user
Interestingly, some classic monopolies, like the old AT&T and Xerox, innovated
tremendously but would fail to capitalize on those innovations (Bell Labs &
Unix, Xerox and the Mouse/Menu/etc GUI).

~~~
nostrademons
I think this is the more common failure mode - a lot of innovative work
happens at big companies, but those innovations never make it to market
because commercializing a product requires a large investment in, well,
finding customers, and the innovators at big companies are not empowered to do
this.

There is still a _ton_ of innovative research work coming out of Microsoft,
Intel, and even IBM, but typically instead of being commercialized and
profited from, it languishes until the company shuts down the research lab and
the scientists involved get jobs elsewhere.

------
bcbrown
I remember one comment at a perf review from my boss when I worked at MS.
There were two of us on the team of 35, who were working on a certain tenet.
My boss said "next review season, I'm going to go around and ask people who's
the [tenet] expert. It should be you, not him."

So although we were working together, we were also competing. And yeah, when
he asked, I was the expert. I think a large part of that was because whenever
the two of us got together to ping people about our tenet, it was in my
office, so the emails came from me, and the bug updates were under my name. I
did that half-intentionally, and feel a little bad about it.

~~~
asveikau
Thank you for reminding me that "tenet" is one of those words that has a weird
MSFT-cult meaning, and an entirely separate meaning to those who are more sane
of mind. :-)

~~~
RyJones
"ask" is my least favorite. "performant" is my most favorite.

------
vonmoltke
That sounds exactly like the hell I went through at Raytheon. In fact, I may
have heard that visibility quote verbatim during one review.

Raytheon didn't have the problems described by Microsofties, though. The long-
term employees (who were a majority at all the facilities I worked in)
developed a sort of mass psychosis that was part Stockholm syndrome, part
misguided patriotism, and part Dunning-Kruger. If you didn't drink the Kool-
Aid yourself the stack ranking system would be the least of your worries,
though it was a useful tool for managers to deal with subordinates who
wouldn't comply.

~~~
Florin_Andrei
> _The long-term employees (who were a majority at all the facilities I worked
> in) developed a sort of mass psychosis that was part Stockholm syndrome,
> part misguided patriotism, and part Dunning-Kruger._

Whoa. "Interesting" combination. More details, please?

~~~
omegaham
I don't work for Raytheon, but I use a lot of their equipment and deal with
their engineers fairly often when stuff doesn't work.

The government is _weird_. Especially when it comes to contracts. There's a
massive process that goes on come procurement time - years are spent deciding
who is going to get the contract, who is going to develop the technology, who
is going to do the manufacturing, etc. Thousands of questions get asked and
trillions of dollars are on the line. Contractors spend lots of money bribing,
er, "promoting" their companies and explaining why they should be the ones to
get the contract.

Then the contract gets awarded.

And, well, the oversight pretty much stops there. Once you have the contract,
you've won. You're in the money. And there's very few checks and balances
going on to make sure that your product actually works. They're going through
this problem right now with Lockheed Martin and the F-35. They've gone through
three failed deadlines and massive cost overruns... and nothing has happened.
Nothing adverse. Just, "Here's more money, please fix it. Oh, and you're very
bad people." Don't worry, though - when the next plane needs to be built,
you'll still be on the short-list for who gets the contract.

The culture in an organization that exists off of this system is also really,
really weird. It's not "Make a good product." It's "Make something that, at a
cursory glance, looks like a good product." The two are treated the same, but
the latter is rewarded much more because it's easier to put sham features onto
something and takes much less effort. An engineer who works his ass off and
perfectly fulfills three features in a system gets overshadowed by the
engineer who makes a garbage implementation of ten features.

Then comes testing time, and the thing is obviously borked to shit. Well, here
comes redesign time! There's no punitive measures on it - after all, design is
completely different from the field, right? This stuff happens. So here's
another 120 billion dollars, let's fix this thing. Wash, rinse, repeat. If you
do it right, you can make a product that requires incremental improvement over
its entire lifespan instead of making it correctly the first time. The result
- everyone makes more money. And the government doesn't really care because
it's playing with Monopoly money anyway. It's the end of August in my shop -
my captain and master sergeant are sitting there saying, "We need to spend the
remaining 20% of our budget on something. No, I don't care what it is. Justify
it and figure it out, otherwise our budget will be reduced and we'll be fucked
when something big comes up next year."

Now - inside this company, no one is actually saying to bork the project and
show the 5th consecutive overfulfillment of the Five-Year-Plan. But you'll
find that the engineers are not as good as they pretend to be, (their massive
achievements are either flawed or completely made up) the managers are
competing with each other for these massive made-up achievements, and the
people in charge of the company are doublethinking making a good product and
borking the shit out of it so that they can say, "We built this thing, so
we're obviously the best choice to keep improving it."

It's completely batshit insane, and if you value any sense of reality, stay
the hell away from any company that deals with the government. The benefits
are really, really nice though.

~~~
mikecane
Too Big To Fail. So it went from being applied to defense contractors to banks
and certain brokerages.

~~~
omegaham
In this case, it's just due to sunk costs. You've already given this defense
contractor a trillion dollars. Ten years later, the contractor has a flawed
project with a lot of holes in it... but what can you do? If you cut them off,
then you have this shitty product that you've already spent a trillion dollars
on. Getting someone else to fix it (or develop something else entirely) would
cost even more. So you grit your teeth and pay them the 200 billion that they
need to redesign and fix it. And then, when they still have a fucked up
product a year later, you're facing the exact same problem... except now
you've spent 1.2 trillion dollars.

The interesting thing is that in the long-term, it's actually a good idea to
tell the contractor to fuck off. The contractor then goes out of business, and
the rest of them change their tune really fast. Meet your fucking deadlines,
or we'll cut you off regardless of the cost. The end result would be much more
realistic cost estimates, better timelines, and a much smaller chance of
fuckery. Of course, tell that to the project director who is getting hounded
by Congress and is looking for the most cost-effective (short-term) way out.

In the brokerage and bank case, it's due to the government saying, "Well, we
can go off of principle and tell them to go through bankruptcy like everyone
else. But if we do that, then the economy will tank and we'll be looking at
trillions of dollars in damages. So we'll pay the couple hundred billion
dollars that we need to keep that from happening."

Unfortunately, that leads to the exact same thing as the contractors - these
banks say, "Well, then all we need to do to get free money from the government
is to get into the position where it costs more money to do the right thing
than pay us off for making bad decisions!"

------
throwaway234yu
An interesting variant of this system is one where executives give or take
points away from organizations based upon team performance. Assume that
individual rankings go from -2 to +2. The CEO gives each VP points according
to his whim and/or how well their organization did in the quarterly
objectives. A favored VP may get +20 points. An underperforming one may get
-3. Now he has to assign points to his directors, who get to give points to
their managers, who give points to contributors. Now the sum performance
review score at each subtree has to match the allocated points.

So you have fixed stacks, but they're at least relative to team performance
and/or political favor. This system tends to depend on the initial
allocations, so you should really get in the favored part of the organization.

Throwaway so you don't know which company I'm talking about.

~~~
bitwize
Fifty points for Gryffindor!

------
bjourne
All stories about how bad stack ranking goes like this: "I was a manager at X
and all my subordinates were above average/great and the system forced me to
give them lower grades."

But it stands to reason that since the system measures performance _relative
to the average_ exactly half of the managers should have had the opposite
problem: "all my subordinates were worse than average but I had to give them
higher grades than they deserved." I think the former problem is much more
common because people tend to overvalue the people they are directly in
contact with.

I suspect that if the managers could set the grade freely from 1-5, the an
unreasonable amount of 4's and 5's would be given. In a large organisation
like Microsoft's the skill of the engineers and the ratings should follow a
normal distribution.

~~~
RougeFemme
And if they were all ranked within one company-wide group, that might not be
so bad. But in the organizations I've worked in that used stack ranking, that
wasn't the case. You were ranked within much smaller groups.

So group A, which, company-wide, would have had all average to above employees
now has to drop some person(s) down to below average, within the group. That
"below average" person - who would have been average company-wide - now gets a
"performance improvement plan" or worse - shown the door.

And group B, which, company-wide, would have had all average and below-average
employees, will now rank some person(s) above average. That above-average
person - who would've been only average company-wide - now gets a bonus.

Should it work like that? No. Does it work like that? More often that it
should; I've seen it - in mid-size and large companies.

~~~
hkmurakami
Now that I think about it, Princeton University now has this sort of problem
(since 2004) with its Grade Inflation policy, where there are quotas for the
number of A's and A-'s that can be given out.

~~~
seanmcdirmid
Academia is one of the few places where the bell curve should be applied
diligently...because you want the students to see some sort of top to aspire
to.

~~~
hga
Not at top schools where most of a class may well deserve an A or B.

Outside of a period in the '60s (the draft) MIT never suffered from serious
grade inflation (I've looked at the numbers), and the general rule is that if
you've picked a suitable major you'll make As and Bs unless you're having
personal problems.

It would be stark raving mad to grade its students on the curve ... and I've
heard of serious pathology in schools that mechanically do, e.g. premeds
sabotaging their peers taking organic chemistry (one tale had one deactivating
many of his peers' alarm clocks). You just don't want to set up the wrong
incentives, and I can attest that at least in the '80s MIT students were
generally happy to help each other.

On the other hand there are state schools that by law have to accept every
applicant who meets a random external threshold ... they don't have much
choice but to flunk out large fractions of their freshman. But after the
courses that do that, and often do that for a major, they shouldn't obsess on
the curve.

~~~
seanmcdirmid
MIT accepts only very smart people, to apply differentiation at that level
wouldn't work very well: the motivation and aspiration has already been
satisfied by the MIT selection process!

But even a good hard-to-get-into department (computer science) at a good state
school (UW) has a fairly diverse-ability student body, so curves are quite
useful in creating some top to aspire to. Even here, since the students got
into the department and the bell curve is fairly fat in the middle (hard to
fail), it doesn't create for such a toxic environment as being at the top is
nice but definitely not necessary (even if you want to go to grad school). The
trouble starts where being at the top is necessary (pre-med).

~~~
hga
It also matters a bit more in the sciences, where an undergraduate degree is
just a ticket to get a Ph.D. unless you want a career as a lab tech.

Also, this is in the context of Princeton, one of the best of the Ivies, I'm
told the most academically rigorous. I suppose ... ah, here's the key: the
Ivies have to admit _way_ too many "legacies", children of alums. Enough that
it makes a _massive_ difference in their student bodies compared to MIT, where
being the child of an alum doesn't hurt, but is no help at all if MIT judges
you can't do the required calculus and calculus based physics. So maybe it
does make sense to grade on a curve ... still, MIT grades on mastery, and I
know if I found myself in this situation:

 _The undergraduate student body president, Connor Diemand-Yauman, a senior
from Chesterland, Ohio, said: “I had complaints from students who said that
their professors handed back exams and told them, ‘I wanted to give 10 of you
A’s, but because of the policy, I could only give five A’s.’ When students
hear that, an alarm goes off.”

[ Followed by the dean of the undergraduate college admitting they've got a
fixed quota system. ]_
([http://www.nytimes.com/2010/01/31/education/31princeton.html](http://www.nytimes.com/2010/01/31/education/31princeton.html))

I'd find another school to transfer to, or at the minimum work out an
arrangement for a great grad school recommendation from the guilty faculty
(would not be hard since I can/could do research).

~~~
seanmcdirmid
I agree that the curve should really be at the discretion of the instructor,
not administrators, who is best fit to apply it reasonably. One of my
colleagues was actually told the opposite in a class he taught recently: that
he was failing or not giving A's to enough students in the classes he was
teaching! It definitely goes both ways, but instructors are reasonably fit to
decide how to do their curves.

~~~
hga
The latter happens more than a little at MIT, and I've witnessed a department
head tell a professor you've very possibly heard of that he'd never be allowed
to teach a particular course again. That was after making him read every
student evaluation, were were uniformly negative except for a single special
case, which wasn't exactly positive.

------
jmcphers
Just to be fair here, the practice of applying stack ranking to very small
populations was not standard across the company. I worked in Office for about
8 years. During those years I found that:

\- Stack ranking is communicated up front and the process is very transparent.
Managers let you know how the process works, what they're doing, how you get
bucketed, what they talk about behind the door, and will discuss your
"calibration card" with you (the 3-5 high and low points they'll bring into
stack ranking meetings).

\- The curve is not enforced on the level of a development team. It's not
enforced in a product group. You don't see the hammer starting to come down
until you get to populations of at least hundreds of employees.

I disliked the system (despite generally getting strong reviews) but it was
not everywhere as demonic as it is depicted here.

~~~
seanmcdirmid
Stack rank has not always been acknowledged publicly. Anyways, its fairly well
known that the process is necessarily political, at each level.

------
0jangojones
Lived through this as an ex MSFT manager myself. The reality was having to
throw direct reports under the bus and explaining to them the outcome was
"relative to their peers". Then they'd look at a smaller team and see people
with much less impact getting good or great reviews (less competition in those
teams). Its an aweful system and firmly believe it factors into MSFTs stagnant
innovation. Lifetime average, peer reviewing and open transfers are what's
needed.

