
Why are Amazon, Facebook and Yahoo copying Microsoft's stack ranking system? - nickmain
http://www.25hoursaday.com/weblog/2013/11/11/StackRankingWhyAreAmazonFacebookAndYahooCopyingMicrosoftsPerformanceReviewSystem.aspx
======
calinet6
Here's a question to which most people experience revulsion, but must be
thought of and answered honestly:

Why not give everyone the same bonus based on company performance? Make it
collective good.

You'll probably think of reasons, like "good people should be rewarded," or
"people who do things wrong need to have consequences," but you must realize
the alternative is this vile demotivational anti-pattern with even worse
consequences.

The right way is to align the company goal with the individual goal, and do it
simply and clearly.

American companies need to understand and follow Deming's principles
([http://en.wikipedia.org/wiki/W._Edwards_Deming#Key_principle...](http://en.wikipedia.org/wiki/W._Edwards_Deming#Key_principles)),
or we'll continue falling into the soul-sucking black hole we're already
halfway into. He already knew all of this, every bit of what we're
experiencing, and our objection to his ideas is nothing more than an
ideological almost religious belief that the most effective way to motivate
individuals is to rank, rate, measure, and reward them accordingly. In fact,
those archaic methods of management only serve to demotivate and systemically
destroy culture and productivity alike, and reduces the quality of whatever
you produce, be it innovation or physical products.

We know this. Deming's ideas work. They are truth in writing, and knowledge in
practice. He pulled Japan out of a post-war recession and made them legends of
quality production for pete's sake. _Why can 't we learn?_

~~~
forkandwait
I am currently reading a bunch of the Toyota Way books, Deming, etc. and
sometimes I wonder if one of the most basic assumptions in the West is that
the individual is the root and the system is a derived thing. This assumption
starts, maybe, with Christianity which tells us that we stand alone before God
judged on our individual character, not on our wealth or social position.
Buddhism, on the other hand, tells us that even our perception of selfhood and
autonomy is an illusion to be rooted out and discounted.

To toss out an assumption as fundamental as these would require a huge
realignment of all sorts of things -- how we punish and reward, our sense of
self worth, who is good and who is bad, etc. So we don't really want to go
there.

I think the West could benefit from a swing to the Systems/ Wholeness side of
the dichotomy, but I wouldn't want to discount how powerful and what a
creative force our individualism has been throughout the last 2000 years.

(EDIT, PS: Deming is the real deal, and the Toyota Way/ Lean books and
movement tries to take some of his surface ideas and implement them without
challenging their readers in the way Deming wanted to.)

(EDIT, PPS: Toyota / Buddha says "You see a problem? Change the system."
Microsoft/ Jesus says "You see a problem? Roast the culpable individuals,
reward the virtuous individuals.")

(EDIT, PPPS: Hegel and his philosophical descendants have the best take on the
dynamic movement between individual and collective, without discounting either
of the two viewpoints.)

~~~
nevster
Minor point...

I'd say Christianity goes along with the original poster's idea of everyone
getting the same reward - ie grace - nothing you do can merit it - it's a
gift.

The parable of the vineyard workers explains it - it doesn't matter how late
in the day the workers start working - they all get the same reward.

~~~
andrewflnr
Also, if Jesus was interested in "roasting" people, he wouldn't have bothered
coming here.

~~~
CamperBob2
And if His old man weren't interested in roasting people, He'd have used
industry-wide best practices such as two-factor authentication and salted
password hashes on the root server, to keep Satan from hacking into the source
repository.

------
brown9-2
The evil, destructive, part of stack ranking is when you need to apply the
20%/70%/10% breakdowns to all teams equally, meaning that even a team of 5
people needs to have one and only one "exceeds expectation" person and one
person who "needs improvement", regardless of overall team level. It's not
clear from this writeup that Amazon and Facebook are applying curves at such a
micro level.

~~~
varunsrin
Stack ranking at Microsoft has a min populaton size (x) - you generally walk
up the org chart until the number of employees >= x, and then apply stack
ranking to that group.

~~~
Metrop0218
I think opponents of stack ranking generally overlook this fact. Yes, it's
terrible if you have a 5 person team, but the data becomes more normal as you
add more people.

~~~
tedunangst
Sort the members of each group of 5. Then take the bottom performer from ten
groups and sort them. Take the bottom five from ten such groups and sort them.
Fire the bottom ten.

If Google did it, they'd call it MapReduce and it would be the coolest thing
ever.

~~~
tehwebguy
StaffReduce

------
ripvanwinkle
Isn't there a fundamental difference between the FB rule of restricting the
top rating to just 2% of employees and the Microsoft rule of decreeing that
there must be a bottom 10% of "poor quality , less talented, undesirable
elements" in the workforce.

The FB system doesn't make the non 2% feel rejected and unhappy - it just
makes it very hard to be crowned the superstar which I think most people find
perfectly acceptable.

To address the relatively longer period of MS employee retention, Microsoft
employees (esp the technical ones) in general work on a set of technologies
(C#, NT Kernel, SharePoint,...) for which MS is the place to be. They build up
expertise and then if they have to leave to join a comparable company, they
need to rebuild in a different set of technologies most likely open source
stuff of which there is very little in Microsoft.

Now if you are a Linux kernel hacker / Python guru/... at Google/Amazon the
world is your oyster - everything you are good at transfers readily to
companies/roles of similar stature outside.

Its almost like Microsoft technologies are a moat around its castle that keeps
talent from leaving.

full disclosure I worked at Microsoft for about 7 years before leaving.

~~~
seanmcdirmid
There are lots of companies that love hiring former Microsoft employees
because they use the same stacks. Its only when moving to a new tech like
google or some startups that there would be a problem, but then again google
and facebook opened offices in Kirkland/Bellevue for some reason....the moat
ain't that deep.

------
mseebach
So, the obvious pathologies of the Microsoft stack ranking model aside, what
are the reasons that a company will want to do this?

The main reasons I can think of has to do with the dangers of getting
comfortable in a large company.

It's very easy for a lazy manager to just hand out "A"s to everyone on the
team and just cruise along. Slackers are poisonous, but painful to deal with
for a conflict-shy, comfortable manager. Actually being forced to think
critically about which of your employees are the top performance, and which
aren't (and it's a mathematical fact that they're not going to be the same) is
a useful tool to keep such a manager on his toes.

Another effect is simply to encourage a certain rate of churn in all teams, to
get some fresh blood flowing through the system.

Stack-ranking directly forces the manager to use his human capacity for
critical thinking to evaluate his employees, and in such is a useful
distraction from that even more disastrous evaluation method: Objective
metrics (hours worked, lines of code committed, bugs closed, sales numbers
etc).

~~~
etler
I think managers are inherently in a bad place to review the performance of
individuals in the team below them. They're primarily affected by the mean
performance of the team, so if one guy is slacking off and the rest of the
team needs to pick up the slack, the manager might not notice. I think peer
reviews will be more honest. If a peer is doing next to nothing, or providing
little to the team while everyone else is working like crazy, you're in a much
better position to see that.

~~~
boomzilla
I think it is a lot more complicated that just that. The root cause here is
there is no easy way to quantify one's contribution to the company (or even a
team) in software development. Some other professions are easier to evaluate,
e.g. stock traders have their own P/L, lawyers/doctors have their own customer
billings, etc. Note that I said "easier", but not necessarily bullet proof,
because it still encourages people to optimize for short term goals.

~~~
etler
That's definitely the root cause. I'm not saying peer review is _the_
solution, just that if managerial review is the alternative, I think peer
review is better.

------
grumps
Standard Big 4 Consulting implementation. It provides value for a few years
until employee realize that it's a lot easier to:

1\. Get a job elsewhere 2\. Hide in mediocrity because the effort to achieve a
high ranking is greater than the reward by a lot.

In my personal experience with force ranking systems, is that it also drives
politics within the organization. As an example:

I once was skipped a promotion because when we went to demo a unit the
shipping department did a poor job packing the prototype equipment that I had
just spent an entire summer building. Due to the packing job, a single RS-232
pin because slightly unseated causing intermittent behaviors for one of many
features. It was still the most successful demo the company had ever given. So
success we received a request for pricing the Military 24 hours later, which
is unheard of. Despite this the Chief Engineer blasted me for the failure, and
our inability to find the issue on site (mind you he was there too). When I
brought this up at my review I was indirectly told by my boss that he didn't
agree with my rating/rank but it was over his head. After that, I practiced
both Items 1 & 2 but discovered that my new company also followed this
practice. So it was a rinse and repeat to make sure force ranking is not
within my new companies.

------
xal
So what's a better way to do it?

You need a documented system. If you don't have a documented system then there
will be an undocumented system which is the same problem with less
documentation.

~~~
mtrimpe
Each employee receives a single unit of value. Let's call it a 'credit.'

Each employee then has to distribute all of his 'credit' to other employees.

Each employee then gives away any credit received according to the same
original distribution.

Each employee continues doing so until the credit received and distributed
reaches an equilibrium.

Each employee is then ranked by the total amount of 'credit' they've
accumulated.

Maybe we should call it 'PeopleRank' ;)

~~~
Angostura
Presumably this leads to people passes their credit to the worst candidate, in
an effort to stop the good candidates from surpassing their own score.

~~~
mtrimpe
Do you have any reason to believe this happens in an iterative model as well?

In this model there's no reason to believe the worst candidate isn't passing
his credit to employees just about to surpass you, which would defeat the
purpose.

------
progn
Eh. I'm in Facebook bootcamp now. Between this article about the ranking
system, a truly uninspiring (to me --- YMMV) choice of teams to work on, and
the press Facebook has been getting lately, I'm seriously considering parting
ways and going somewhere else. Nobody can beat Facebook's pay or food, but
what good is it if I feel like I lack direction and purpose? How much would it
damage my career to say I tried FB bootcamp and didn't feel it was a match?

~~~
kybernetikos
I can't speak for anyone else, but it depends a bit on what you do next. One
or two solid jobs down the road, I doubt anyone will really care, but if you
do it enough that it looks like you have made a habit of joining up and then
not giving it a fair chance based on gossip from outside the company, then
yes, that will count against you.

------
cnahr
It seems to me that stack ranking can only work for companies that are so
attractive for new talent that any new hires are likely to be more valuable
than the lowest-ranked current employees. Once a company is no longer so
attractive, as seems to be the case with Microsoft today, you're actually
pushing out better talent in exchange for worse.

~~~
rm445
Eh? Do you really think their pool of applicants is worsening quickly enough
that a bottom-10% performer is better than the median new applicant? They
still have bags of money to pay people, you know.

------
joe_the_user
Facebook is the company that surprised me here.

Stackrank seems like umpteen other methods whose ultimate aim is to vacuuming
people dry and discarding them. This "works" in the sense that if you _can 't_
motivate someone with the challenge, excitement and etc of working for you,
there's always money, fear and the-other-etceteras.

Yahoo and Microsoft have lost all cachet to their workplace, and Amazon has
always been innovative in the "our engineers have calculated exactly the
profit made from turning off the air-conditioning in warehousing and legal has
drafted the matching don't-ask, don't-tell contract" sense.

But Facebook using this seems like an indication they've reconciled themselves
to being on the way down. That was quick.

------
bmohlenhoff
Because it's easy and everyone else is doing it. Next question?

------
gum_ina_package
The title of this post assumes MS's stack ranking system is bad. Based off of
personal experience, MS has dramatically improved how they do stack ranking.
All companies stack rank, even startups. The only difference is that when that
is formalized, everyone is on the same page and culture is more transparent.

~~~
r00fus
Since you seem to have more knowledge of this than the general public here,
can you provide info on how it's been improved of late?

As I understand stacked ranking, there doesn't seem to be many improvements
that help when the underlying premise (forced attrition of "poorly performing"
employees - where "poorly performing" is a judgement handed down by
management) has major downsides.

------
lifeformed
My impression that these types of systems are more for culling than accurate
performance review. Perhaps they need to drop a certain percentage of
employees by some target date, and this is the most blame-free way to do it on
a large scale.

~~~
mseebach
That's not an accurate impression. Microsoft has grown their staff steadily
while employing this policy.

~~~
Nomez
All that means is that they are hiring more than they are firing.

------
andrewkreid
The main takeaway here is that large companies have large-company pathologies.
If you don't like that, work at smaller companies.

------
SteveJS
"one person cannot be evaluated and paid in isolation of budgets" \- SteveSi
is just wrong on this. This is only true if you have a policy of highly
differentiated pay for short term performance and/or have an "up or out
policy". ... both of which are in effect at MS.

You can argue it's a bad idea not to have one or both of those policies, but
it is certainly possible to have a review system based on what one did, rather
than based on the necessary political fight over cutting up the budget pie.

------
anonymous
I'm more interested in why employees don't band together to game the system
and ensure a given outcome, then split the winnings. Like a sort of a pyramid
scheme - you and a buddy agree that this quarter it will be you who gets
promoted and split the bonus/raise with your buddy. Then you get a third buddy
and get him in on it if he agrees to let the second buddy be promoted this
quarter. Now you're splitting 3 raises among 2 people. Then you get a fourth
buddy in and promote the third one and so on. The system ends once the group
has too many people at a high position. At that point any new employee joining
the company at a low position is screwed, probably. Also at this point
infighting will probably break out from people who don't want to split their
raises with the ones with less money, given that they don't have a way of
advancing any further. Obviously the only way to win at this is to be the very
first person who, after everybody leaves, gets left with the highest position
and highest salary. Which is why I called it a pyramid scheme.

~~~
gknoy
How visible and gameable are the metrics, though? You'd have to ensure your
metrics were better than some, worse than others, but NOT so much worse as to
be dangerous.

Also, that sounds like a horrible amount of concerns for a developer. I'd like
to build and ship code, not worry about measuring performance.

------
amaks
"Although there isn’t forced ranking in place, it does looks like Google one-
upped Amazon in making it difficult to climb up their corporate ladder by
having a promotion process based on pleasing everyone."

This is not true. First, I think it's great that promotion-readiness is
decided by an employee and not her manager(s). Second, when promotion packet
is written, it gets reviewed by a promotion committee, most likely in another
campus, and there is a very high likelihood that promotions are granted more
objectively compared to the manager's peers (and up the chain, depending on a
target level like it's done in Microsoft, long before peer feedback is
written). Promotion committee decisions get reviewed and iterated to satisfy
the promotion budget, and those lucky ones who meet the bar, get promoted.
Sounds like a pretty fair system to me.

------
unsupak
It depends on whether there are any checks so that such ranking systems are
not abused. I know first hand that such systems are ripe for abuse by those
who are connected. I know of an incident when a well connected long term
employee performed very poorly and was put in the weeding out category.
However because of his connections with Vice Presidents was able to engineer
so that someone else was given his place in the ranking and fired. In a way a
person was specifically hired to that team, reviews were engineered to give
him a bad review in order to remove the well-connected but badly performing
manager from the bottom list. This was not uncommon and would happen
invariably in order to save the well connected but poorly performing person.

------
grandalf
Inevitably some percentage of hiring decisions were flawed, either that they
underestimated or overestimated the candidate's potential.

These kinds of ranking systems are a mechanism to correct for that error once
there is _a lot_ more information known about the employee.

~~~
vladimirralev
That's not how stack ranking works. The only thing that is inevitable is that
you will have many teams where almost everybody is either top-performer or
low-performer, but they will get ranked on the global scale as if they are
equally productive.

------
amaks
Of course there is a curve in all companies. The question is of interpretation
how review scores get assigned (stab in my back and lunches with manager's
peers like in Microsoft and perhaps in Amazon), or based on a peer reviews
like in Google. Besides, to the best of my knowledge there is no fixed bottom
10% (or any number of percents) in Google/Facebook which ought to let go after
each review period, compared to Microsoft.

------
winslow
I recall Valve having a stack ranking system as well? I haven't heard anything
bad about their ranking system though. Maybe it is different considering the
lack of managers with the flat culture that makes it better.

EDIT: Article I found on MS vs Valve stack ranking.
[http://www.jpuddy.net/2012/stack-ranking-to-gain-team-
insigh...](http://www.jpuddy.net/2012/stack-ranking-to-gain-team-insight/)

------
WalterBright
> Why not give everyone the same bonus based on company performance? Make it
> collective good.

That pretty much happens when companies routinely provide stock to the
employees.

------
brosco45
Because they hired Microsoft managers.

------
mbesto
SAP is too!

------
michaelochurch
Why do these companies have Microsoft-style stack-ranking systems? Because
_many engineers are pussies who don 't fight for themselves._

Imagine if that stack-ranking nonsense were done to a law firm. (Law firms
have a very civilized way of managing people out into external promotions if
they, after ~6 years, obviously aren't going to make partner. Google "Cravath
model".) There'd be lawsuits galore. Attorneys would start legal process just
to get embarrassing details (about said stack ranking, perhaps) into the
public in discovery. Why? Because they (including the female ones) have balls.

Doctors and lawyers would never put up with MSFT-style stack-ranking. Bankers
find clever ways to subvert and abuse it when it is imposed upon them.

But there are a lot of engineers who are just cowards, unwilling to stick up
for themselves.

Example: in many companies, negative performance reviews are part of the
transfer packet and impede mobility. Being (again) pussies who don't fight for
themselves, many engineers just assume that's how things work. No, it's not.
You can actually build a legal case on that alone. It's harassment
(interference with job duties, here interpreted as using internal mobility
opportunities) and already the start of a legal case-- if you get your shit
together and start documenting. Use the right words and the bad review will go
away.

Stack ranking isn't technically illegal, but if it renders immobile people who
perform in good faith (i.e. don't flagrantly blow off job requirements) it
does leave the company civilly liable for harassment charges-- interference
with job duties. If software engineers collectively grew a pair, it would fall
down within minutes.

~~~
yesiamyourdad
A lot is self-imposed: engineers tend to believe in the idea of a meritocracy
and the 20% overachievers. It's the lone hacker ethic. The downside is that if
you stick to that, 80% of us get the shaft.

Lots of comparisons to attorneys, on significant difference is that attorneys
have a way to advance their career while remaining an attorney. I've got
nearly 20 years in this biz and constantly get told that if I want to increase
my salary, I need to move into management. I notice a lot of the discussion is
around how to get "promoted". Attorneys get promoted to partner, at which
point they have equity in the company, and that's not "here's some stock
options", you actually have your cash invested in the partnership.

