Microsoft made me very happy this week they announced that they are abandoning their stacked or forced ranking used in their performance and compensation management systems. I have never been a strong proponent of using the stacked or ranking process to evaluate an individual, team or group’s performance because let’s face it – there are some teams that just kick butt.
In fact, I asked the question in January 2012: Have performance reviews run their course?
For those of you who are not familiar with the stacked or forced rank system – essentially it asks managers to create a bell-shaped curve and rate their team’s performance along that curve. Managers have to rank their teams from 1-5 or some other number and create a forced distribution.
Even in team’s that have exceptional performance, the manager would have to identify employees who excelled and who were poor performers. It was no surprise that management would push back with Human Resources about having to make such decisions especially when their team blew away all their business goals.
You might say, within in the team there is some differentiation on performance even the slightest difference – that point I agree. However….even the lower performing members of a team could be better than someone else in another team that is the top performer.
In my experience, management did not have the time or inclination to normalize performance across an organization to make it work. Turf wars would ensue and honestly Human Resources would just coach or tell management to follow the “process”.
So, you might ask, why did management use force ranking in the first place? They believe it was easier to administer than having qualitative performance discussions. Even today, take a look at your performance management system – is it designed only with quantitative measurement or do you have qualitative factors include? What percentage of the total review is comprised of qualitative measures? Does it show the employee’s overall performance?
While managers did not always like the results of using a stacked or forced rank process; they could use it to explain “why” you did not get the rating, salary increase, stock options, etc. that you believe you deserved. It was easier than having a candid and forthright discussion about the employee’s performance – especially if the employee was an average or low performer.
Many managers are uncomfortable with telling employees to improve and following up with coaching to help them make improvements. Managers get promoted without having specific training and coaching on how to manage and inspire people to excel and what to do with poor performers. When managers see an employee sliding, they may turn a blind eye because it means more work instead of catching the employee before they begin the free fall.
Perhaps now, with companies dropping the stacked or forced ranking process, senior leaders will invest in management’s skills to become better people managers. Employees drive continuous results and breakthroughs, not machines or equipment. And if you need someone to help you do that…let’s have a conversation.