
Microsoft does away with stack ranking - cnahr
http://www.zdnet.com/microsoft-does-away-with-stack-ranking-7000023103/
======
Ensorceled
One major thing I learned from 360 reviews is how bad developers are at
judging each other or their manager.

I've had employees on probation for lack of productivity judged as excellent
by their peers because of their ability to socialize their "abilities". I had
the best developer on my team (a 10x developer if ever there was one) get
slammed on technical ability rankings because of his prickly personality.

My VP and I used have quite the chuckle at all my "strengths" identified by my
team and peers ... because they liked me and I was effective they attributed
positive characteristics to me that I did not have.

~~~
jredwards
Likability is underrated. Someone who is easy to work with, improves workplace
morale, and makes other developers feel comfortable at work is a valuable
asset. Certainly, it shouldn't be a substitute for technical ability, but it
can be a very significant complimentary attribute.

~~~
meowface
The problem is when likability affects how someone reviews your technical
abilities. It should be a separate category, but most people would have
significant trouble disassociating the two; more so if you're friends with a
coworker.

~~~
overgryphon
Is it so important that the individual components of a person's performance be
evaluated individually? What about someone with exceptional technical
abilities who uses those skills to ensure that blame for potential failure is
always assigned to other people, rather than focus those impressive skills on
the success of the overall project? Is it so important that person receive
recognition for their technical skills?

If someone's social behavior jeopardizes the success of projects they work on,
then perhaps it doesn't matter how technically competent they are.

~~~
xymostech
The answer to your question is probably "no". However, most of the discussion
was in reference to the stack ranking at Microsoft, where people's pay was
being determined by how well they were ranked by their peers. If you were
generally likable, people might also say that your coding skills were better
than they really were. So, I think that you're right, and it's a good reason
why the stack system didn't work very well.

~~~
overgryphon
Except Microsoft doesn't stack rank people based on peer feedback- it's based
on all the leads getting into a room and stack ranking their directs.

It's very possible to have a bad stack ranking but excellent peer feedback.

With this system, someone who delivers very well, but undermines other people
or projects they work on would likely receive a high stack ranking, but poor
peer feedback resulting in private discussions. People in charge of managing
said employee may ignore the problem, attempt to place the employee under
people who will help them address social problems, or quietly find a way to
move them to a different org. It's quite likely none of this shows up in stack
ranking.

------
ethomson
This was seemingly inevitable whether this is actually useful or not.
Microsoft has been getting increasing heat about our stack ranking system,
both from employees and from external people.

But I don't think stack ranking is our problem. I think our problem is that we
value this notion of the brilliant and excellent individual contributor
instead of valuing employees that value teamwork and team problem solving. I
suspect this is an institutional problem, having been started by exactly that
sort of person.

It's _this_ that causes the backstabbing and the mess that people attribute to
"stack ranking". Until we put value in changing this culture, I don't see too
much changing.

(Disclaimer: my team at Microsoft is sort of odd - we're not in Redmond, and I
don't see a lot of this backstabbing that is oft-reported. I _do_ see our
managers overvaluing the brilliant IC and I _do_ see my organization
undervaluing teamwork, but at least we're not doing that stupid game playing
like joining weak teams to get great reviews.)

~~~
InclinedPlane
Stack ranking is just one part of the many problems in MS's corporate culture.
Once it's gone it won't end the politics, they'll just find other outlets (of
which there are many). Another big problem is the review system in general,
regardless of stack ranking. MS prioritizes highly visible and easy to
complete work over more important and more difficult work. This creates
perverse incentives to, for example, avoid fixing things that are known to be
broken, or even assuming responsibility for them. It's far more beneficial to
spin up a new project of trivial value than it is to take ownership of some
broken or long abandoned system or tool that desperately needs improvement.

~~~
CurtHagenlocher
Is there a human organization of any size that doesn't have politics?

~~~
InclinedPlane
That's a bit like asking whether or not there is a human population of any
size that doesn't have STDs.

Sure, that's plenty true, but it's one thing to have a small incidence of
herpes and another thing entirely to have a pandemic of HIV or syphilis.

~~~
e12e
Your analogy reminds me of this I just read the other day:

"Some countries initially felt they were isolated from AIDS, but now they
realize there is no such thing. There is no border, no boundary. We've learned
that walls endanger because they encourage a false sense of security. Even if
you could impose the perfect program for screening international travellers,
infected people will get in, and some of your own citizens will come back
infected. In the meantime, people won't follow safe sex practices, because
they figure they're protected inside their walls. (...)

One of the major barriers we face in trying to get countries to deal
effectively with AIDS is the tremendous gap between social myth and social
reality. I think closing this gap is a useful step. It's important to deal
with things as they are, and not as somebody would like them to be. (...)

I have asked a lot of government officials and experts, 'At what age do young
men and women in your society begin to have sexual intercourse?' This is not
prurient curiosity on my part. I'm trying to figure out when you might start
certain kinds of educational programs. The expert thinks a minute. He may take
on a reflective look as he considers his own adolescence, and he makes a
decision. Is he going to tell me when he had sexual intercourse, or when he
_should_ have had sexual intercourse? The answers are not at all scientific,
and frankly, people often don't know what's going on in their own society in
terms of sexual practices and drug use."

\- Jonathan Mann, director of the Global Program on AIDS, from the book:
"Reinventing the Future: Conversations with the World's Leading Scientists" by
Thomas Bass, 1994

Great book. But the (somewhat paraphrased) quote fits rather nicely if you
replace screening with "hiring process" and "career advancement" with "sexual
practices".

How do we _want_ our organizations to work? What should the life-cycle of an
employee be? Can we state that frankly in a way that's both good for the
company _and_ good for the employees? Where do managers go as they grow older?
Up or out? If up, where does the CEO go?

------
jrockway
This sounds pretty good to me. If they actually implement what they wrote
about here, I think Microsoft could become one of the better big companies to
work at.

(I have a friend who works at BofA. They wanted him to take on a new project
that he wasn't interested in. As a reward for agreeing, they went back to his
old performance reviews and changed them from "Meets expectations" to "Exceeds
expectations" and then promoted him for excellent performance. LOL.)

------
Patrick_Devine
This is good to see. The whole premise of stack ranking is fundamentally
flawed.

Clearly there is a curve that when applied to an entire population shows that
there are under-performers. So far, so good, however, the problem is that
stack ranking isn't applied to the entire population since it's impossible to
normalize the performance of each individual. Instead, companies that stack
rank do it on a team-by-team basis, which is a statistically inaccurate sample
of the population where there can be a lot of skew.

Since it's up to the manager to rank their employees, this causes a lot of
problems. This is particularly a problem if the manager sucks at hiring, or
over hires for their team, and there is a lot of chaff. There is a massive
incentive to do this, because the more employees a manager has, the more
corresponding perceived worth in the organization they'll have. Plus, if it
comes time to cull, it's really easy to shield the favourite employees, even
if they have performed poorly, without disrupting the organization.

On the flip side, if you're really, really careful about who you bring on
board, your team is in a weaker position because there is no one to terminate.
This means you get rid of good performers based on bullshit metrics. I saw
this happen at a largish virtualization company where one of the best
employees on our team was let go because he had some minor HR-ish type issue.
This caused a big percentage of the team to be demoralized and ultimately
leave.

~~~
nikatwork
Sounds like an evil but effective way to combat the BS of stack ranking - keep
a couple of obviously subpar staff chained up in the corner ready to be
sacrificed at the review altar then replaced. Honestly, I can see the benefits
of SR as a once off "clear the decks" purge, but as a continual measure it's
insanity.

------
Shenglong
_We will continue to invest in a generous rewards budget, but there will no
longer be a pre-determined targeted distribution. Managers and leaders will
have flexibility to allocate rewards in the manner that best reflects the
performance of their teams and individuals, as long as they stay within their
compensation budget._

Is this not in effect the same as a curve? Giving higher bonuses to one person
means giving lower bonuses to another. Giving everyone the same bonus
discourages high performers from staying (and also working on the same team).
People who receive little to no bonuses take the hint to leave, just as if
they had received a 4 or a 5. Considering only 10% of employees receive a 4,
and 5% receive a 5, I'm thinking that effectively, there has been no change.

~~~
robododo
Yes, but there is no forced curve fit.

A healthy organization will always "manage out" people who are not fit for the
job. At Microsoft, folks are given the hint early enough that they can explore
other internal options before leaving the company entirely.

Though, to be honest, if someone just can't cut it, they will leave the
company.

~~~
amaks
"At Microsoft, folks are given the hint early enough that they can explore
other internal options before leaving the company entirely."

Except that it doesn't work. No internal hiring manager will ever allow the
interview loop/transfer for the internal candidate with the score 4 or 5 (I
think those are the lowest scores in the current model:-). In 99.9% of cases
those unlucky who got 5 get laid off by the next review period.

~~~
robododo
I've actually seen one person move after a 5. A poor data set, admittedly. It
does happen, though.

------
gesman
Stack ranking is created by management's inherent inability to trust people.

And that, in turn, is created by management's inability to trust in their own
abilities. This is proved to be true in case of Ballmer and overall
Microsoft's performance while under his leadership.

These changes are surely a positive sign for Microsoft.

------
jasonculbertson
I saw the downfall of stack ranking immediately after a company I worked at
was acquired by Microsoft. The workplace changed within a month from one
focused on teamwork and support to Lord of the Flies. When the only way you
can succeed is by being "better" then someone else you are forced to step upon
others.

I believe that this is also the effect of working for a public company with a
stock that hasn't moved in price in 10 years.

~~~
nikatwork
Seen the same - work turned into a Survivor gameshow. Instead of concentrating
on the product, everyone formed alliances and ganged up on the less-liked
people. Everybody was so focused on politics nobody cared about the product
anymore. Then the product died. I still don't think our MBA execs learned a
damn thing from the whole fiasco, I'm sure they're somewhere else getting paid
big bucks to run some other poor teams into the ground.

~~~
VodkaInferno
I've seen this a few times at MSFT. Except that the product didn't really die
because nobody wanted to take responsibility for the actual killing. And every
now and then there would be a re-org, the former exec would "move on" to his
next atrocity and a "recycled" exec would go in front of the team and declare
his passion for the product and that this time it will be different.

------
pmh
Interesting timing given the article and discussion yesterday [1] about other
companies using stack ranking. I wonder (and to some extent hope) that the
others follow suit.

[1]:
[https://news.ycombinator.com/item?id=6712717](https://news.ycombinator.com/item?id=6712717)

~~~
dhyasama
Especially interesting considering the author of that article works at
Microsoft

~~~
umeshunni
Yeah - as a manager, he probably knew about the changes a day earlier and
hence decided a pen a post criticising other companies' ranking systems.

~~~
pagefault
Managers found out this morning. It's possible he was part of a pilot program
and had early knowledge, but I suspect it's a coincidence. If anything, having
early knowledge would likely have kept him from writing that until after the
new Microsoft program was announced.

------
moca
This is absolutely great for Microsoft and its employees. Grade by curve
creates internal friction that is harmful to the team. I am a manager in a
large company. I always suggested to grade by performance against job level.
There is written requirement for each job level, it is relatively easy to
measure against the written description by both managers and peers. Everyone
has incentive to get salary raise, bigger bonus, promotion. There is no need
to use internal competition to add more pressure.

On the other hand, the lower 5% people only cost about 2% of companies
spending. It is not even worth to worry about it. You need to interview
equivalent to 50% of employee count to replace that 5%, plus whole set of HR
bandwidth to handle it. Microsoft has been losing a lot of value to fire lower
5% while keep a lower 5% CEO at the top for so many years.

------
alkonaut
I wasn't aware that US companies ranked employees and used rankings when
purging the workforce (when I think about it it's a pretty obvious idea). In
countries with stronger labour laws "underperformance" basically isn't a
reason to fire someone. The employer is responsible for the employees
performance (training etc.). This can be frustrating in the software business
when just a few really poor performers can really sink a team. Obviously
forming a really elite team in the US is easy, since you can purge from the
bottom, provided you don't affect morale too negatively. But how do you do it
in countries where firing for underperformance isn't an option? It's really
hard to get away from a bell-curve team.

~~~
sib
"In countries with stronger labour laws..."

Interesting. I would refer to those as countries with "weaker" or "perverse"
employment laws...

~~~
cesarbs
I think that's really subjective. There are always ways to abuse any kind of
system.

Take for example working hours. A country with strong labor laws will usually
prohibit employers from making employees work more than x hours a week, and if
they do that they have to pay for overtime. That will make some people happy
and productive because they will feel safe having protection from the system.
But some people will abuse it and slack off.

On the other hand, if you don't have control over that you might end up in a
situation where people are only considered good employees and productive if
they work crazy hours all the time. Instead of being abused by employees, the
system will be abused by the people at the top.

And I guess that covers underperformance. Who defines what bad/average/good
performance is? Is the guy who does really good work considered to be
underperforming just because he works 9-5 and wants to spend quality time with
his family instead of making the office his second home? That kind of thing
has to be prevented by law.

------
mathattack
Now that they get rid of it, I wonder if they're going to run into problems on
the other extreme...

\- Difficulty knowing who the best employees are.

\- Employees surprised by layoffs. "I thought I was doing well."

\- Managers slacking on giving constructive feedback.

Performance management is such a tough subject. Both extremes (ruthless
stacking, and no-curve) have issues and I don't know a better solution.

~~~
pagefault
Part of the new program is an explicit focus on frequent feedback. If
anything, there ought to be fewer surprises than the current once (twice-ish
with midyear discussions) a year feedback.

The risk going forward is that without being forced to a distribution, wishy-
washy managers will trend towards the middle. High achievers will be under-
compensated, and under-achievers will be overcompensated. The budget hasn't
changed, so the same pool of money has to be divided among the same set of
people, managers now have more freedom as to how.

~~~
mathattack
My experience is that wishy washy managers make everyone top rated, therefore
nobody is really top rated.

~~~
pagefault
If everyone gets top rated, then the budget gets applied, everyone gets
middling awards. Same result as rating everyone middling in the first place.

------
SubuSS
>We will continue to invest in a generous rewards budget, but there will no
longer be a pre-determined targeted distribution. Managers and leaders will
have flexibility to allocate rewards in the manner that best reflects the
performance of their teams and individuals, as long as they stay within their
compensation budget.

The compensation budget is the key part here. I don't know how this is going
to account for:

\- Failed products with smart developers and their retention. \- Avg products
with very smart developers \- Less 'visible' projects. Those that management
don't realize is necessary until you have no one working on it. (This happens
a LOT in big companies).

All this can be solved by pumping a ton of money into this as they are
alluding elsewhere though.

Overall the fact that they are taking feedback seriously and are working
towards a solution is pretty positive though.

------
jmspring
An interesting read related to the topic -- Sinovsky on performance evaluation
and large orgs:

[http://blog.learningbyshipping.com/2013/11/09/realities-
of-p...](http://blog.learningbyshipping.com/2013/11/09/realities-of-
performance-appraisal/)

------
kmeredith
I'm a big fan of Dale Carnegie,
[http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influenc...](http://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influence_People).

But, I think that leadership/true emotional control means that, even if
someone is treating you wrongly or criticizing you, you can dissect the
behavior, and then appeal to reason.

For example, I appreciate, and even invite, ruthless criticism ("go ahead and
insult me if necessary") when getting feedback (on my code, performance, etc.)

The importance of having friends who can say, "you're an idiot - you don't
understand X, Y, Z" is high.

Sometimes I dislike when, at previous jobs, I've had to mask the truth simply
to avoid hurting someone's feelings. Because, if you hurt someone's feelings,
that person will close up to you.

------
bmohlenhoff
It's nice that now they are going to value teamwork and collaboration more
highly, but I don't see the lack of a curve making much of a difference in
compensation level for the average contributor. The total size of the
compensation budget is fixed, and they have to spend all of it.

Just because now 30% of the staff can fall into the Exceed Expectations bucket
doesn't necessarily mean that the budget increases. The money gets divided
differently, that's all.

It does seem like a positive change though if they can improve the culture of
the workplace and minimize the amount of backstabbing, cronyism and political
nonsense.

------
ffrryuu
Microsoft is having a horrible time hiring anyone due to the stack ranking.
The rot is now too deep.

------
Todd
This is a great move for the company. Especially now that so many competitors
have internalized the process. It was the single most identifiable thing that
poisoned the culture at the company. It will be interesting to see what they
replace it with. The process certainly made it easier to make decisions higher
up the chain (even if it was difficult for the managers and their direct
reports).

------
ironchief
By killing stack ranking, MSFT has taken low hanging PR fruit from the next
CEO

~~~
marshray
It may also take some of the pressure off of high-level people who previously
had their rankings approved by Ballmer. (I don't have anyone specific in mind.
Yes seriously.)

------
fluxon
This is interesting in the context of
[https://news.ycombinator.com/item?id=6712717](https://news.ycombinator.com/item?id=6712717)
"Why are Amazon, Facebook and Yahoo copying Microsoft's stack ranking system?"
\- the feature copying usually goes the other way.

------
anmalhot
i hope this will curb people from constant backstabbing that I witnessed
during my short duration there. It was painful to watch very smart, bright
people indulge in really pathetic behavior consciously to 'protect'
themselves..

------
san86
I kinda like what my employer does. There is a 1-5 ranking, but the
distribution/buckets for bonus is determined after the reviews are complete.
Of course, the concern here is that management "can" slot the buckets in a way
that suits them, but I trust them enough to not do that.. Due to this, no one
knows "what needs to happen to get X bonus".. everyone is just trying to do
their best to get to the highest score and the amount of cash you get depends
on what bucket you fall under

------
brosco45
Best way is to do away with review and go with equal profit sharing instead.
You don't even need to worry about levels/title, just call everyone a Vice
President.

------
DenisM
If I remember correctly, they promised that before, and all that came out was
that "the curve" was still there, but hidden from sight and under a different
name.

------
joeldidit
I'm glad this happened. It was a completely necessary move. I hope it's not
just a surface change while they twist things to keep it all going.
Backstabbing and not collaborating to ensure you're not the one at the bottom
of the curve is no way to work. And having to worry about and deal with
backstabbers everyday quickly leads to a toxic work environment. Good
riddance.

------
cykho
This is going to open the floodgates of deadwood. Stackranking at least forces
hard choices. They just needed to adjust the curve by team performance. E.g.
rockstar teams have more exceeds than underperforms and a failing team has
more underperforms than exceeds. Under the most recent system the best way to
get a review is to be an A player on the B team.

------
tn13
No one actually says stack ranking is bad. But in reality it is very effective
in getting rid of few troublemakers.

~~~
marshray
I'll say that stack ranking was bad and any US company can fire troublemakers
without it.

------
mkramlich
Good for them. I don't like Microsoft but I like to see any company getting
smarter. It's hard enough as it is to find and keep good people. And there are
pretty obvious alternate ways to identify and expel "dead wood" if that was
their original justification for stack ranking.

------
j_baker
The last bullet point strikes me as incredibly odd. No ratings? How will
managers determine raises and bonuses if they don't have a rating to determine
whether the employee is meeting expectations or not?

~~~
waqf
You're asking how managers will be able to freely assign numbers to
individuals according to their performance, without being guided by numbers
that the same manager previously freely assigned to the same individuals
according to their performance?

------
curiousDog
Looks like the process will be more peer driven. There'll probably still be
ranking to find the top performers rather than weed out the bottom 10, which
is good.

------
mbesto
Curious - what's the origin of stack ranking? Was there any science
(psychology/sociology) behind it?

~~~
nness
I'm not sure how it was developed, but its popularity is credited to Jack
Welch, who introduced it to General Electric in 1980. In doing so, GE
experienced a "5-fold increase in revenue":

[http://en.wikipedia.org/wiki/Vitality_curve](http://en.wikipedia.org/wiki/Vitality_curve)

~~~
marshray
In 1980 President Reagan was elected. In addition to many technologies (e.g.,
LSI ICs) coming online, the amount of taxpayer debt that the US government
funneled into our industrial sector over the next few years was simply
staggering.

One should look at where this revenue was coming from and compare GE to other
companies in the sector (i.e., other makers of nuclear reactors and jet
engines) during this time before drawing conclusions about personnel
management theories (of all things).

------
ujsfdo
Bill Gates improved the world!

~~~
iancarroll
Shoo.

------
joeldidit
I almost wet myself.

