
The Poisonous Employee-Ranking System That Helps Explain Microsoft’s Decline - probabilistic
http://www.slate.com/blogs/future_tense/2013/08/23/stack_ranking_steve_ballmer_s_employee_evaluation_system_and_microsoft_s.html
======
bguthrie
The only thing that matters about your coworkers––the only thing––is if, after
the year's over or the project's done, you'd work with them again. If a team
is doing good work and everyone on it enjoys working with each other, do not
fuck with it.

Everyone in life has disagreements, petty jealousies, things they struggle
with in other people. The beauty of the question, Would you work with her or
him again?, is that it specifically doesn't try to disentangle those
things––because to a productive team the quality its members' relationships
with each other as important as the quality of their work. If one or the other
is off, it's not necessarily anyone's fault, and it may not even be cause for
termination. But it's as good a metric as you need.

But it's utterly foolish to winnow on a percentage basis. You'll break up good
teams and prevent better ones from forming. You'll destroy morale. You'll
encourage a leadership culture of cutthroat sociopaths whose success is at
best tangentially related to the quality of their work. Do not do it.

~~~
dobbsbob
This is the system Bill Gates' foundation is currently trying to peddle to the
US government for school reform.

~~~
kkowalczyk
The crucial difference is that teachers don't work in groups i.e. you would
rank them against all other teachers in a given school.

People say stack ranking is bad within Microsoft because you're not ranked
against all 50k+ employees but against 10+ people that report to the same
manager.

If 2 out of 10 people are guaranteed low ranking, then it's better to be a
mediocre programmer in a team of poor programmers than to be a very good
programmer in a team of even better programmers.

It also means that it makes sense to sabotage the performance of your 9
colleagues because you only care about looking better than them, not about
doing best possible job for the company or your team.

A global stack ranking, if it was actually possible, would be great. You do
want to get rid of low performers (and hire better replacements) and in a
large enough pool the bottom 20% will really be worth replacing with better
people.

~~~
devcpp
I agree, I guess that I would do my best to get the easiest tasks so my
performance would be up, and the hardest tasks would either never get done or
in a really dirty way.

But how do you implement a global stack ranking in such a diverse company like
Microsoft? There is no good criteria for comparing the kernel developers to
the frontend programmers, for example. I doubt you could even find 100
employees working on the same kind of task.

~~~
yuhong
I think michaelochurch has talked about "concave" vs "convex" work a lot.

~~~
dusklight
Can you explain in greater detail please? Are you using the terms "concave"
and "convex" in the same way that NNT does in his recent book Antifragile?

~~~
yuhong
[http://news.ycombinator.com/item?id=5177851](http://news.ycombinator.com/item?id=5177851)

[http://michaelochurch.wordpress.com/2013/03/14/gervais-
macle...](http://michaelochurch.wordpress.com/2013/03/14/gervais-
macleod-9-convexity/)

------
tytso
"Stack ranking" as it has been reported to be used at Microsoft, is multiple
things conflated together. Some of these things are, by themselves, not
necessarily bad. The problem is that people hear the words "stack ranking",
and immediately jump to "eeeeevil" and "that's what killed Microsoft", and
"Google does stack ranking, it must be doomed / I'd never want to work there",
which is sloppy thinking.

Let's taking what people are calling "stack ranking" apart. The first aspect
of stack ranking, is simply forcing people to make decisions about what
things/object/people are more important/better/etc. than others. This can be a
valuable technique. For example, there is a very useful testing instrument I
took a while back that took a list of twenty values, e.g., "justice",
"loyalty", "honesty", "security", "family", etc., and asked me to force rank
sets of five of these values in order of which I thought were most important
to least important (i.e., DNI Clapper would rank "honesty" below that of
"loyalty" and "security"; others might make different choices --- there were
no right answers). By taking twenty or thirty of these different subsets,
ranked in the order of which I thought were most valuable, a computer program
would allow me to see which values I considered most important, and which I
considered least important. This was a valuable thing, and so the technique of
doing forced ranking is and of itself a useful thing.

The second technique is that of trying to normalize employee performance
review ratings across departments --- whether using a bell curve, or some
other technique. Again, in isolation, this isn't necessarily a bad thing. Some
managers might grade their employees more harshly, and some might be soft
touches. Within a departmental level, it may be easier for a manager to argue
that his team were all stars, but how do you deal with the question of an
entire department using a harsher or more lenient grading system? One of the
simplest things to do is to use a bell curve --- which may or may not be fair,
especially if the company says (and all companies will claim this) that they
hire the "best and brightest".

The final component is what do you actually do with this normalized ranking
number? If you really believe that everyone you've hired are the "best and the
brightest", then firing the lowest scoring 5% is insane. If however you don't
have confidence in your hiring mechanisms, such that some duds make it past
your hiring screens, then firing the lowest 5% may make a lot of sense; you
want to get rid of them before they do (more) damage. (BTW, this is is why I
believe a hiring system which tries extremely hard to avoid hiring duds, at
the expense of sometimes failing to hire qualified individuals, is extremely
important; it has its downsides, but it's very much a necessary evil, because
the alternatives are far worse.)

What about using this number as an input to compensation? Here, using a
normalized bell curve may make more sense. Certainly if you only have fixed
pot of money to use for salary increases and equity refreshes, you want to
make sure that your top performances get rewarded.

What about promotions? For junior engineers, if they are growing in their job,
presumably they should get promoted as they demonstrate that they are getting
better at programming and understanding the company's systems and development
environment. Using the performance rating would certainly be one metric, but
evaluating that person's proficiency and results should probably be just as
important, if not more so.

The point is that just doing a "stack rank", whether as an input to the
performance review mechanism (i.e., asking other employees to stack rank their
peers, and then having some algorithm to merge those inputs together, and
taking into account controversial rankings where multiple colleagues had
differing opinions about whether person A was more or less effective than
person B) or whether managers are forced to stack rank all of the employees in
their department, is not necessarily a bad thing.

The problem comes from what do you _do_ with the stack ranking after you've
generated it. It's that which can drive a company's culture, either positively
or negatively. So my suggestion to Microsoft employees (other than to consider
a career at Google :-), is to not rail against stack ranking per se, but to
point out some of the negative effects of some of the things are done with the
stack rank after it has been generated. Perhaps, if your HR people are at all
competent, they might be more amenable to your suggestions. Or, maybe you'd be
better off considering another company altogether, in which case my first
suggestion still stands. :-)

~~~
hga
" _If however you don 't have confidence in your hiring mechanisms, such that
some duds make it past your hiring screens, then firing the lowest 5% may make
a lot of sense._"

I'm not sure doing the above ever makes sense. We've heard of at least two
severe problems with it at Microsoft, the worst 5% _at gaming the system_ get
zapped, and a tremendous amount of effort is devoted to not being in that
lowest 5%, or managing who gets that every 6 months. E.g. managers retaining
"deadwood" so they've got people to sacrifice in the future, and ultimately,
as dalek_cannes puts it
([https://news.ycombinator.com/item?id=6267518](https://news.ycombinator.com/item?id=6267518)),
"Stack ranking causes employees to _compete with each other rather than the
company 's competitors_. It's all downhill from there."

Anything you do in this direction, including not trying at all, will strongly
affect your corporate culture and productivity; perhaps the best one can do is
to strive to have "least worst" systems.

~~~
tytso
You can avoid this by making it a deep dark secret that you are firing the
lowest 5% --- or that the reason why certain people are put on a PIP, subject
to a "resource action", or "has found new opportunities outside of XXX" was
due to the the fact that they fell into the lowest 5% bucket. I've seen this
work at a past company at least reasonably well. A few people knew about the
policy, but it wasn't something which was top of mind by all of the engineers,
to the point where it started adversely affecting the company culture.

(BTW, I'm not saying it was a good thing; and I'm glad I'm no longer working
there. But if you don't worry about silly things like ethics, and only worry
about maximizing shareholder value, it's a strategy that might work for a
while.)

------
qq66
Well, one more blog post about the "ONE THING THAT KILLED MICROSOFT."

Nothing killed Microsoft. It just exhibited mean regression, as everything
eventually does. It found itself on the very top of a mountain in an industry
where you have to keep climbing to stay still.

The same thing happened to Apple -- it had an unprecendented string of hits
with iPod/iPhone/iPad and it took competitors a few years to catch up.

Sometimes, a basketball player will make ten straight baskets. He'll seem
invincible, then he'll make another and the crowd will go wild. But if he's a
60% shooter, at some point he'll miss a basket, and another, and another, and
descend back into reality.

That's just how the world is.

~~~
InclinedPlane
I spent several years at MS, 3 as an FTE, and Microsoft is definitely in
decline, partly due to stack ranking, partly due to general cultural shifts
from being a big, lumbering company.

One of the things you have to realize is that a lot of the dynamics of the
company over the last decade have caused a mind boggling amount of talent to
simply evaporate out of the company. Many of the "fuck you I'm fully vested"
folks who were around in the earlier days of MS either checked out or peaced
out whenever they hit their personal bullshit thresholds. More recent hires
have generally found that other companies are often more exciting, more
rewarding, and more lucrative to work at. MS today tends to punish caring
about things (not always, but more often than not). If you try to make a
difference and put forth the effort to make merely sensible changes then
you'll spend years struggling against the system and if you're lucky you'll
only have moderate success to show for it.

And the stack ranking system tends to reward people who are good at gaming the
system rather than those who are good at actually delivering anything of
substantive value to end users.

Naturally, all of this tends to be very discouraging to engineers, especially
those with a bit of maturity and experience who see that with their talent and
skills they could go elsewhere and not get shit on all the time, work for a
company they wouldn't be embarrassed about, and actually get stock options
that are worth something. And, since techies tend to value working alongside
other techies that they admire and look up to this sort of process tends to be
a positive feedback loop.

It's simply unimaginable that this loss of talent hasn't had a huge impact on
the company.

~~~
vladimirralev
Microsoft are giving stock options instead of actual stock? That can't be
true. Are they looking for stupid employees or what?

~~~
biafra
What is the problem with stock options?

~~~
Patrick_Devine
Options are great for a company where there is a lot of growth (ie. a
startup). Options are horrible for a company which has no growth (ie. a
fortune 500).

Options give you the ability to buy a share at the last strike price set by
the board (FMV for a share). If FMV for your startup share is $0.01 and you
exercise it for $20, you're walking away with $19.99 in your pocket having
spent $0.01. Multiply that by 50,000 and you're almost a millionaire.

If you get an option for a share of MSFT at $35, unless the stock price goes
up, you're not getting a dime. _IF_ it went up by $20 a share, you'd be doing
just as well. That's unlikely, however, given how infrequently the stock
moves. If they gave you 5,000 shares instead, you'd be sitting on a (more or
less) guaranteed $175,000 _even if the stock price didn't move_ instead of
absolutely nothing.

~~~
rmserror
The number of shares in an option grant is not necessarily the number of
shares in a stock grant. You're assuming the choice is "5,000 options [for a
single share]" or "5,000 shares." That's ridiculous. Clearly the shares are
worth strictly more. But that's (typically) not the comparison.

------
rsweeney21
This is exactly why I left Microsoft after 8 years. I worked really hard, had
a great year and was expecting a great review. When I got my A-70 I told my
manager I would be leaving. They offered me stock, a raise and even gave me a
promotion, but I was done. I knew that I'd never be happy working under the
Microsoft review system.

I saw many great developers over the years leave for the same reason. This
system is poisonous. There is no way to tailor the rewards of the team to the
actual performance of the team.

~~~
ryanhuff
Sorry, what's an "A-70"?

~~~
kabdib
A = "Achieved" \-- you did what you said you would do, and it's in line with
your peers.

70 = You're an average Joe. You're not a bozo, and you're not a rock star, and
you're not going to get a promotion soon.

~~~
chetanahuja
_" 70 = You're an average Joe. You're not a bozo, and you're not a rock star,
and you're not going to get a promotion soon"_

And then they offered you a promotion to stay when you threatened to leave ?

~~~
hga
That tells you how bogus his review was. They didn't _really_ think he was an
easily replaced average Joe cog, but they had to fill all their various slots
and, I suppose in their view, he should have been happy not to have to been
allocated to a worse one.

It's grading on an arbitrary curve, not on merit, " _There is no way to tailor
the rewards of the team to the actual performance of the team._ "

------
beloch
The ideal employee is both brilliant and easy to get along with. Practically
no employees are ideal. Sometimes the least productive people are the peace-
makers that let the rest of the team tolerate the brilliant assholes. Cogs are
great, but it's idiotic to treat oil as though it were mere deadweight. Both
are needed in any company.

~~~
codeonfire
that's fine as long as the oil is paid 10x less. oh, they want to be paid six
figures to just sort of hang out a few hours a day, be everybody's friend, and
leave by 3? The economics doesn't work because the productive people who are
pulling 10-14 hour days will see that productivity is not necessary or valued
and leave.

~~~
Joeri
People pulling 14 hour days with regularity are not that productive.

~~~
robin2
There's a limit to the amount of serious, concentrated thinking that you can
do in day, so it should be fairly obvious that pressurizing coders in to
working long hours is counter-productive.

With other jobs it might be less of an issue. Although I've never done 14 hour
days, I did once have a warehouse job assembling cardboard boxes for 12 hours
a day, and I don't think the hours harmed my productivity. (My recollection is
that I worked as hard as I could, just to make the day pass more quickly.)

~~~
codeonfire
In my opinion, this idea about no one can work more than 8 hours a day
productively was created to discredit anyone who tries to get ahead through
extra effort. It's similar to the idea that says we only need 30 minutes of
exercise a day. In reality, pro athletes train for 4-6 hours a day.

Yes, a person is a fool if they do more than 8 hours in a workplace
environment, but many people work longer days if it furthers their own
personal goals. Pressuring coders who don't have an interest in working longer
is pointless.

~~~
derefr
> It's similar to the idea that says we only need 30 minutes of exercise a
> day. In reality, pro athletes train for 4-6 hours a day.

This isn't a contradiction; professional athletes do far more exercise than
they _need_. That's why their fitness constantly _increases_ (far past what
are the normal requirements for being considered "healthy") rather than just
plateauing at "healthy."

------
rayiner
This bit stuck out for me: "For that reason, executives said, a lot of
Microsoft superstars did everything they could to avoid working alongside
other top-notch developers, out of fear that they would be hurt in the
rankings. And the reviews had real-world consequences: those at the top
received bonuses and promotions; those at the bottom usually received no cash
or were shown the door."

Individualized bonus/compensation decisions have no place in environments
where the work is heavily or totally team-oriented. It forces people into a
mode where they focus on getting the most individual credit instead of making
the product as successful as possible. That general incentive exists in any
team-setting, of course, but when you grade everyone on a curve like that and
tie compensation/job retention to it, you really force everyone into playing
that game.

By way of contrast, look at how investment banks do bonuses. If you're in IBD,
your bonus is usually based on the success of your deal teams. If you're in
S&T, your bonus is usually based on the success of your desk. Even further in
that direction is how many law firms handle compensation: everyone is paid in
strict lock-step. The end-result of these models is that nobody has an
incentive, at least a purely monetary incentive, to jockey for credit. The way
to make more money is to have the project be successful, and that means doing
your best to cooperate with your teammates.

Sometimes you're forced to pay individualized bonuses. It might be the only
way of attracting the superstar that would otherwise be able to make a lot
more money elsewhere. But Microsoft has very high hiring standards and is
rolling in cash. It should not have this problem.

~~~
kenshiro_o
That simply isn't true in the world of banking. Why do you think the financial
crisis occurred? Bonuses are DISCRETIONARY and therefore even if trader A and
B are in the same division, trader A may get a significantly higher bonus than
B because he made more money or was simply more astute at the politics game.

------
gametheoretic
Uhhh...decline? Gates stepped down in 2000, when Google was Goofy and the iPod
was just an idea. Ballmer could've done worse for himself, to say the least.
The very least. XP, Xbox, yes, Vista, but also the extremely impressive _full
swing, timely as a motherfuck recovery_ from Vista to launch Win7. (And while
we're here, Win8 gets way more trash than deserved. The Start Menu was
overloaded. People had like 200 goddamn folders in there. Don't shit on MS for
trying something new at a time when something new was needed.) --and I'm not
even an MS fanboy _at all_. This is just bullshit writing.

~~~
colmvp
I don't understand why hardcore techies wanted the start menu bad so badly.

I used Windows for a long time before migrating to OSX and the usage of a 3rd
party app called Alfred. Now I just type what program I want to open, which is
significantly faster and easier than having to navigate through an OS. I'm
sure Windows probably has an equivalent.

~~~
MichaelGG
The new system has two major issues. First, it forces a full screen context
shift - everything disappears, which is just annoying. The icons are small, so
a lot of results have a goofy looking scaled icon with only the first word or
so if their title. On a server, it's even more ridiculous, and even MS's own
TechNet admits as much (try to shut down).

Second, typing at the start screen is not the same as the start menu. It only
searches some items, and you have to click or arrow down several times to
select the kind of search you want. It's the opposite of unified search. It's
annoying.

So, MS forced an annoying thing on everyone (even on servers!), with no way
around, except to install 3rd party hacks. Of course they're going to get
pushback on it.

------
ChristianMarks
_I think everybody wants to work in a high-performance culture where we reward
people who are doing fantastic work..._

This is typical superficial business talk about "culture." Dig what the
humanists have to say about it: [http://www.fastcolabs.com/3016238/why-your-
startups-culture-...](http://www.fastcolabs.com/3016238/why-your-startups-
culture-is-secretly-awful)

------
jcheng
I only worked there for about 3.5 years starting in 2006, but from my
perspective, dead wood was a bigger problem than the stack rank, and the stack
rank was the main force keeping dead wood from being an even bigger problem.

Are there better mechanisms to systematically force managers to make the tough
calls to let people go or counsel them out?

~~~
kqr2
There is the Cravath Sytem's "Up or Out" policy:

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

    
    
      In a hierarchical organization, "up or out" is the 
      requirement that each member of the organization must 
      achieve a certain rank within a certain period of time. 
      If they fail to do so, they must leave the organization.

~~~
sitharus
That would be very difficult in a software development role. You'd either end
up out of dev and in management or you'd have to leave.

Everywhere I've worked there's only a few levels where you actually code -
right now we have graduate, dev, and senior dev. You'd end up moving your best
people to a level where you can't use their skills any more.

~~~
jcheng
Microsoft does have an up-or-out policy, but they take pains to try to avoid
the problem you point out. Management is not considered "up" from dev, but a
parallel track (whose bottom rung is a little higher than the bottom rung of
dev). The top rung of the dev ladder is "Distinguished Engineer" and these
people are spoken of in much more hushed and awed tones than any VP.

Also the up-or-out policy has exceptions: there are "stable" levels where you
are allowed to stay for the rest of your career. IIRC the lowest stable level
is Senior Dev (level 63) so if you are hired at level 59, the expectation is
that you have the potential to make it to 63; if you earn promotions too
slowly or not at all, you'll eventually be let go. This is true even if you do
a perfectly adequate job at levels 59-62.

It's not a model that would work for every company, obviously...

~~~
sjs1234
The top dev ladder rung is Technical Fellow (promotion from distinguished
engineer.) Except for Dave Cutler, who is a 'senior technical fellow' ...
which is the exact same level with a different name.

------
DenisM
For the sake of balance let me provide some "defense" of the system. I don't
actually like it, but there needs to be some perspective in the discussion.

A senior manager once confided to me that he does not have a shortage of good
engineers to tackle even the most complex engineering problems, but he has
acute shortage of people who are able to coordinate work of those good
engineers. I have then concluded the review system makes sense in the light of
this revelation. Hiring and Performance Review policies, however bad they
seem, successfully maintain a pool of talented engineers; it's a solved
problem. The problem that is not solved is making sure those engineers make
coordinated effort towards a worthy goal. It is Microsoft's core belief that
such coordination does not emerge naturally and so it must come from a leader
or a group of "leaders", and the goal of the review system is to identify and
promote such leaders, even if they have to sacrifice some of the good
engineers in the process (finding more is a solved problem). The way the find
more "leaders" is measure people on "scope of influence", with idea being that
top engineer and manager talents will be able to influence more people
compared to their peers. A sad byproduct of this approach is that a lot of
people expand their visibility just for the sake of expanding their
visibility. This produces a lot of sideffects, to the point where they
sometimes become major output of the system rather than mere byproducts.

So if you wanted to know why the system works the way it does, above is a
possible explanation that makes some sense.

------
semisight
I can't imagine working in an environment like this. If the core idea is that
all employees fall on a bell curve in their overall value, what about small
sample sizes? In what dimension do you measure them--what is "performance"
even? And to do this every six months?

Is there something I'm not seeing here? How is this still considered a viable
management strategy?

~~~
mgkimsal
Nobody ever got fired for aping Jack Welch...

~~~
hga
To the extent this was responsible for his early departure from Microsoft, it
didn't work out in the end. The article also says GE dropped this after Welch
left.

------
netcan
This sounds like one of those ideas that works well in a one off context but
has side effects in a relatively big one.

Using a bell curve might be more technically correct, but the overall idea is
too force the person making a judgement to make a judgment. The reality is
that some employees are better than others. Getting a manager to rank them
will give you better results than getting a manager to rate them. Neither are
perfect. One is sensitive to the manager's biases, the other breaks when one
team is better than another.

If you went to a one hundred person company with 10 managers and asked them to
do this one day, you would probably end up with a fairly accurate view of who
is worth what. Most one hundred person companies would be improved by
replacing the bottom 5-20 people and damaged by replacing the top 5-20.

If this wasn't about employees, I don't think it would be controversial.
Imagine a company with 100 clients ranked them and then decided to give
special attention the 10 best while ignoring the 10 worst.

The problem with this (like most compensation schemes) is how they affect
employees when they find out. People have strong reactions to being ranked and
measured.

~~~
rodgerd
> Using a bell curve might be more technically correct

But it's not. That's what's so maddeningly stupid about it. Who gives a fuck
if your employees are better or worse than one another? The only question that
matters is whether they're doing the job you need done to the standard you
need it done to. Arbitarily punishing some percentage of your team _even
though they 're doing a great job_ is madness.

~~~
netcan
The bell curve suggests that in a group of 20 employees, #8 & #12 perform
similarly. #1 probably performs a lot better than #4. Thats what I meant by
more technically correct.

 _" the standard you need it done to"_ doesn't really fit the model of what MS
do. _" great job"_ is relative. Anyway, the whole thing probably carries some
assumptions. Some employees are great. Some stink. It's unlikely that a team
of 20 will have a couple of stinkers. Employees #19 & #20 are adding little
(or negative) benefit.

It's dehumanising. I agree. So are all management practices at companies big
enough. It may also be wrong considering how it affects morale and how it
affects productivity when people try to game it (seeking out weak teams).

I just meant that I can see where it comes from. It would make just as much
sense if you asked a restaurant owner to rank his mains. Out of 15 mains, 2-3
are probably stars that people come specifically to eat. 10 are OK. 2-3 suck,
they make people not come back.

~~~
potatolicious
> _" Out of 15 mains, 2-3 are probably stars that people come specifically to
> eat. 10 are OK. 2-3 suck, they make people not come back."_

Then fire them. It's also important to note that the 2-3 who suck suck in
relation to a consistent standard, not in relation to the other employees.

There is a fundamental disconnect between the justification of stack ranking
and the actuality of stack ranking. In a sufficiently large population of
employees you get some duds - that's a statistical certainty. The giant leap
and non sequitor is that _relatively ranking_ will expose said duds better
than measuring against a consistent, non-relative bar.

Where I work right now we've had the displeasure of having hired some duds.
Very few mind you, but in all cases they were let go soon after it became
apparent they were duds and could not be reasonably improved. All of this was
done without the need for stack ranking, and (thankfully) outside the scope of
some annual remove. If you've hired someone who's actively detracting from
your company, why in the frell are you waiting a whole year to remove them?!

------
asenna
I just can't believe how or why they are continuing with the system when it is
clear this is counter-productive and is hurting the company in many ways. What
possible reason can there be? There is no way I would ever want to work in
that kind of an environment.

Is there another side of the story? Can someone from Microsoft shed more light
on this?

~~~
nc4n8gh2k
Before I agreed to work at Microsoft I asked the HR people about it. They felt
this was a great system because a company with ~100K employees was bound to
fit a bell curve regardless of its ability to hire and retain "the best". They
told me the five buckets only had to meet their expected quotas at the level
of Steve Ballmer, so it absolutely was not a zero-sum game as some had
alleged.

I haven't seen a full year cycle applied to myself, but the one period I did
participate in didn't quite work that way in practice. In reality, the zero-
sum gets enforced much lower in the company than Ballmer himself. Exactly
where probably depends a lot on what division and team it is.

Neither have I seen evidence of the claimed worst effects of this type of
system. Instead I saw great people take a hit for the team, rather than
retaining underperformers for this purpose. Who knows, maybe in some ways this
is just as bad.

Every big organization needs some kind of system and there are certainly worse
ones. This system is effective in allowing the company to promote some people,
keep some where they are, and move some out.

But it would be nice if the current shuffling at the top became an opportunity
to bring in something better.

~~~
thaumasiotes
> They felt this was a great system because a company with ~100K employees was
> bound to fit a bell curve regardless of its ability to hire and retain "the
> best".

This isn't true at all. If you have the ability to hire and retain the best,
then the company curve will look like the rightmost extremity of a bell curve,
which has rather different properties compared to the entire curve. As I
understand it, this is why baseball statistics value players in terms of "wins
above replacement" instead of "relative to the average player" \-- the average
player is so much better than the majority of professional baseball players
that it's not useful to assume in your tooling that you could hire one.
(Whereas, if you have the entire bell curve, then the average person is both
median and modal, and is therefore easier to find than a person at any other
level.)

Disclaimers -- I don't know statistics, corrections very welcome.

------
sprague
Note that at Microsoft, a good manager (i.e. somebody who takes care of
his/her people) will spend far more on the stack rank process than on, say,
product strategy.

~~~
kabdib
Well, you have managers who are good at both. You want that kind.

But in the absence of any kind of ability to produce something, yeah, you want
a manager who is politically savvy, and who can protect you, and can promote
you well in the stack rankings. (I had a couple managers who were /terrible/
at this, and my "performance" suffered. In reality it was all presentation and
horse-trading).

~~~
r00fus
Great for the manager, and the employees, but what about the company?

What sane business do you want managers being better at "stacked ranking" than
product strategy?

This to me, is indicative of why Microsoft has failed - when your daily job is
to prove that the team next to you - not your team is the one that should take
all the bad reviews, that's pitting employee vs. employee, when it should be
employee vs. external competitors

------
ballard
The most obvious question: Does Microsoft annually fire the X% lowest
"performing" as some other shops do?

But more importantly, there are much bigger problems at Microsoft than gaming
performance reviews: product strategy, how people are treated and relations
between divisions.

MSFT may need to let go of some legacy in order to move forward faster. (Risk
enterprise customer hate, but whatevs.)

~~~
smm2000
Nope, it's very difficult to get fired from Microsoft unless you try really
hard. Answering emails and doing minimum amount of coding (1 hour/day) is
enough in most groups to get average reviews.

~~~
akurilin
Knew an SDE II with 10 years of experience at MS who didn't know how to grep
through a file to find out which log lines started with a certain word. Guy
seemed have been holding pretty well onto his job, probably senior by now.
Plenty of deadwood.

~~~
Hydraulix989
I guarantee said developer knows how to use "findstr" in the DOS shell to
accomplish the same task though. Remember, this is Microsoft.

~~~
akurilin
I used "grep" in a generic way. My comment referred to whatever grepping tool
available on that platform, which at the time was indeed findstr, as you
suggested, and Powershell.

Of course it'd have been silly to expect a Windows-only-ever person to be
familiar with Unix tools, that was not the point at all.

------
plinkplonk
Interesting that Google also has stack ranking. If stack ranking were such a
major factor of MS's decline why isn't it affecting Google the same way?

~~~
potatolicious
What cromwellian said, but I'd also add that, as an outsider at least, the
zeitgeist amongst people I've spoken to is that stack ranking _is_ hurting
Google.

The poisonous effects of stack ranking may take time to manifest in a notable
way at Google. Maybe if Google's products stopped being as cool as they are
now, or their compensation is no longer as generous as it is now (see:
becoming Microsoft), this would be accelerated.

~~~
DannyBee
Hurting how? Google doesn't fire the bottom 10% or whatever. They also don't
completely screw the bottom 50%.

The only curve that is enforced is really a calibration to ensure equal pay
for equal performance across orgs

------
sytelus
This is not a problem inherent in stack ranking. _Any_ performance review
system that (1) allow unbalanced pay and (2) makes this fact visible to
employee, will cause exact same issues. Here unbalanced pay means you want to
divide available reward such that higher performing employee gets lions share
while those at the tail gets peanuts. Whether you do this through peer reviews
or through manager reviews or stack ranking or team level performance or by
throwing dice, you will always find some portion of employees feel the system
is unjust and they deserve better ratings. Only way to avoid this is by equal
bonus pays OR not assigning any ratings at all. For most technology companies
at least the option of paying every one equal bonus won't be acceptable. It is
known fact that highest performing employees perform 5X-20X than lowest
performing employees and it would be hard to retain them if they were paid
same bonuses as everyone else.

However not disclosing ratings could certainly be option. Or you can only
disclose binary ratings "Stay/Fire" or trinary rating "Green/Yellow/Red" where
they don't disclose amount/range of bonus but whether employee performance was
sufficient for continuity of employment. People who thought that disclosing
bonus indicating ratings was a good idea probably bought on an argument that
this will motivate employees to improve themselves to get higher ratings. In
reality many aggressive employees actually do work even harder to get back to
better ratings however people who have feel lack of opportunity or are rusted
eventually settle down with being labeled "average" and pull back on their
effort level just to keep employment going.

~~~
simonh
The problem is that if you have an A team where all the members are performing
well and deserve good compensation compared to the rest of the company, stack
ranking forces you to penalise some of them anyway, even if its for minor
petty reasons that in other teams would not be a factor.

Nobody is arguing that good people shouldn't be rewarded compared to poor
performers. The problem is that stack ranking actively works against the
formation of stable teams of high performers anywhere in your company.

------
kdsudac
The most frustrating thing about these kinds of systems is how they never seem
to apply at the top. Was Balmer a top CEO? The market doesn't seem to think
so.

~~~
psbp
Apparently the board didn't either. I guess they just get a much longer review
cycle.

------
dkhenry
This isn't a Microsoft thing. If I remember correctly its used at IBM as well
as a bunch of other big name companies.

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

~~~
CountHackulus
From experience at IBM, it was just as terrible there.

~~~
dkhenry
I would never claim it was a good program, but this is actually much more
common at your big companies then people would like to think. I know the
Government does this in both the military and civilian workforce. Most
government contracts I have worked with do this ( Lockheed Martin, SAIC, and
Boeing )

I think until you have been in a big corporate environment you don't really
appreciate how little they care about their workforce.

------
Patrick_Devine
I worked at a rather largish virtualisation company which uses the "Nine Box"
performance review process. The idea is that you get two scores, your _public_
score which is told to you about your performance, and then a _private_ score
which is surreptitiously given by your manager about your potential to get
promotions.

Managers are then given a quota of how many people should be put in which box,
and get hammered if they give too many people good reviews. The "secret" score
is directly tied to your compensation, so basically your manager could be
completely screwing you and you would have absolutely no indication.

~~~
Domenic_S
> _and you would have absolutely no indication._

Except for your paycheck?

~~~
Patrick_Devine
My suspicion would be they use plausible deniability. "We're not giving out
great raises this year". Which is technically not a lie, I suppose. They're
not giving out a great raise _to you_.

------
phantomb
I understand Enron tried the same thing. These people are idiots.

[http://postbiota.org/pipermail/tt/2007-June/000884.html](http://postbiota.org/pipermail/tt/2007-June/000884.html)

~~~
at-fates-hands
They actually talked pretty extensively about this in the documentary "The
Smartest Guys in the Room". I just remember watching with my jaw on the floor
wondering why an organization would pit employees against each other like
that.

The fact MS continued to adhere to it after Enron's collapse is stunning.

------
chris_wot
The end sentence is absolutely damning of the man:

"It will be interesting to see whether Microsoft’s next CEO takes more
personal responsibility for the company’s corporate culture—or leaves it for
Lisa Brummel to take up."

------
pkj
Most companies use a variant of stack ranking. If you agree with the core
philosophy that more productivity => better pay, then you need to implement
some sort of a differential pay algorithm. Having said that the implementation
really sucks. It is not natural and continuous, rather people get pigeonholed
into discontinuous buckets.

Let me take a concrete example closely mirroring my experience. There are 4
fixed performance buckets. Top 5%, Next 20%, Next 65%, Bottom 10%. They get
hikes of 20%, 8%, 4%, 0% respectively. Again, these are fixed numbers. Let us
assume there are 4 people A,B,C,D and out of a hypothetical score of 100,
score 95, 90, 87, 85 respectively based on various parameters. You would
assume that since D differs in ability with A by 10%, he would get 90% of A's
hike. But sorry, due to the stack implementation he gets 0%, while A gets 20%
! Let's say if the scores of A, B, C, D were instead 100, 50, 25, 5, the hikes
would have make much more sense.

Summary: Discrete curve of benefits works well only when it closely matches
the curve of people productivity. This is rare. So it just ends up being
unfair and creates an unhealthy rat race.

~~~
njr123
I disagree with the whole premise of 'productivity => better pay'. I think it
is much better and easier just to pay everyone in the same role the same
(maybe with some company wide profit share) and then fire all the bad people
as quickly as possible. You avoid all the politics of performance reviews, and
the problems of how to rank the relative value of different skillsets.
Incidentally, I believe this is the system that netflix uses?

Identifying the bad people usually pretty easy. The problem I find is that
most people in software a pretty non-confrontational, so it is hard to get
them to fire the bad people, even when they are obviously bad for
productivity.

------
bosch
(Apologies for posting this as I know it doesn't add to the discussion but I
have no idea how else to contact an MS engineer.)

Help!!!

On the off chance anyone at Microsoft reads this, my Microsoft account got
deleted by a bug in Live Domains and I haven't been able to successfully
contact anyone to report it or fix it. The forums have been useless and now I
can't do anything MS related without my account including my phone!

My e-mail is in my profile.

~~~
marshray
Sorry, I don't know anything about the process of recovering your account
info. But if you can describe the bug in enough detail that someone might be
able to repro it I can forward _that_ to the right person. (Which certainly
couldn't hurt your chances I figure.) Email me ['m', 'a', 'r', 'a', 'y', '@',
'm', 'i', 'c', 'r'...dotcom]

------
michaelwww
This reminds me of mandatory minimum sentencing that takes the jail time given
away from the discretion of the judge. It seems that Microsoft doesn't trust
it's managers to make objective reviews, especially to call out poor
performers who are otherwise liked by their coworkers. There must be a middle
way.

~~~
threeseed
Exactly. And we have a tried and true way of identifying great managers. Can
you deliver a great result, on time and on budget.

Why MS never focused on output is beyond me.

------
fatjokes
Does Google do this as well?

~~~
pmb
It does put people in buckets, but places no restrictions on the quantities
that must reside in each bucket.

~~~
fatjokes
Sensible.

------
epynonymous
this is just the dumbest article i have ever read. there are very few top
performers, a types with an appetite for challenges, who would work in a
meaningless project just to compete with mediocre talent, that's absurd!
number one motivation issue is a bad manager, closely followed are lack of
career development where in i mean interesting technical challenges
andncompeting against the best and project interest. a types or top performers
who take initiative and want to work on the biggest challenges do not shy from
challenges, in fact, they want them! the types that shynfrom challenges and
curl into meaningless projects are those that seek work life balance and are
really your low performers.

~~~
lzman
You've missed the point. In a company where everybody performs equally, the
ratings would still have to be distributed between the following rankings,
regardless of actual performance. Amazing Good Average Poor

Judging by comments, it appears to be _the_ #1 choice for HR departments.
Which is just plain depressing, but more depressingly, not surprising.

~~~
epynonymous
bell curve, nothing new

------
api
Ranking and selection systems -- fitness functions -- are _very very hard_ to
get right.

I did a lot of work with genetic algorithms and evolutionary computation /
alife systems a while back, and thus did a lot of work with writing fitness or
objective functions. It turns out that it's extremely difficult to write a
fitness function that the evolving system will not "game."

To give a specific example: I once wrote an objective function to train an
evolving system to classify images, a simple machine learning test. After
running it for only an hour or so, the system's performance seemed
_spectacular_ , like way up in the 90'th percentile. This made me suspicious.
The programs that had evolved did not seem complex enough, and past
experiments had shown that it should take a lot longer to get something that
showed reasonable performance.

After a lot of analysis I figured out what it was.

I was pulling test images from two different databases. One database had
_higher latency_ than the other. The bugs had evolved a timing loop to measure
how long it took them to get their data (they were multi-threaded) and were
basically executing a side-channel attack against the training supervisor.

In another very similar case, I found that the bugs were cooperating by
communicating by way of the operating system's thread/task scheduler. They
were using timing loops to kibitz.

Humans are smarter than little evolving computer programs. Subject them to any
kind of fixed straightforward fitness function and they are going to game it,
plain and simple.

It turns out that in writing machine learning objective functions, one must
think very carefully about what the objective function is _actually
rewarding_. If the objective function rewards more than one thing, the
ML/EC/whatever system will find the _minimum effort_ or _minimum complexity_
solution and converge there.

In the human case under discussion here, apply this kind of reasoning and it
becomes apparent that stack ranking as implemented in MS is rewarding _high
relative performance vs. your peers in a group_ , not actual performance and
not performance as tied in any way to the company's performance.

There's all kinds of ways to game that: keep inferior people around on purpose
to make yourself look good, sabotage your peers, avoid working with good
people, intentionally produce inferior work up front in order to skew the
curve in later iterations, etc. All those are much easier (less effort, less
complexity) than actual performance. A lot of these things are also rather
sociopathic in nature. It seems like most ranking systems in the real world
end up selecting for sociopathy.

This is the central problem with the whole concept of meritocracy, and also
with related ideas like eugenics. It turns out that defining merit and
achieving it are of roughly equivalent difficulty. They might actually be the
same problem.

------
hatchoo
I used to work with Andersen Consulting/Accenture. We had this ranking thing
as well. Had lots of peers who were of the kiss ass type. Fortunately was very
technical and stood out while still at the programmer/analyst level. Would
have fared poorly at the managerial level though.

Many other companies probably have this too.

------
lzman
I was a programmer a UK banks for 5 years where they used (and still do use)
the bell curve performance rating system. High performing teams match the bell
curve distribution, therefore match the employees to the curve and you have
high performing teams. It, and a load of shit directly related to it, is why I
left.

------
dotmanish
Adobe used to have the Stack Ranking System until a couple of years, which
they eventually ditched:
[http://www.hreonline.com/HRE/view/story.jhtml?id=534355695](http://www.hreonline.com/HRE/view/story.jhtml?id=534355695)

------
danbmil99
What I love about the last decade of the Microsoft saga is how Bill left
Stevie holding the bag, just when he knew it was going sour.

------
api
Hasn't Google implemented stack ranking?

------
chatman
Haha, Yahoo does it every 3 months since Mayer came on board! Soon, even Yahoo
will crumble like this.

------
afhof
It would be a lot more convincing if they could say Microsoft Stack Ranks And
No One Else Does. Google, for example is a strictly stack ranked company and
hasn't folded (at least in my opinion) into a caustic environment as described
in this article.

~~~
nostrademons
Google uses stack-ranking in a very different way. At Google the stack ranks
of all your _peers_ are merged and then used as a sanity-check on the
promotion process, to catch cases where a manager may be artificially
inflating the reviews of his favorite reports or where he may be overlooking a
star employee who everyone else in the organization agrees is worthy of
promotion.

~~~
jvert
So Google has a different algorithm for computing the stank rank, but still
stack ranks? Microsoft also incorporates peer feedback into the review
process, but treats it as just another input into the manager's decision
process.

------
yuhong
Personally on stack ranking at MS I'd probably settle for ending some of the
worst practices. Even Google's stack ranking don't have some of the problems
of the one used by MS.

------
icecreampain
Can somone please explain to me the attraction of working at a company with
such a ranking system? Are [tech] jobs _that_ hard to come by nowadays that
one is willing to accept anything to pay the bills?

