By a strange quirk of fate, two pieces of news emerged on the same day concerning Microsoft and Yahoo which showed the two companies going in completely different directions.
To deal with Microsoft first, UK website The Register reported it has decided to kill off its ‘stack ranking’ employee performance review system. Citing a companywide email from Lisa Brummel, executive vice president of Microsoft’s human resources department (obtained by the Wall Street Journal), it said managers had been told to abandon the old system of ranking employees on a bell curve.
The system had become loathed within the company because it forced managers to rank certain percentages of employees as top performers, good performers, average, below average and poor performers. The inflexibility of the system meant some employees were ranked as poor performers even if they were doing a good job.
The Register cited an article in Vanity Fair by Kurt Eichenwald, which had this to say of the stack ranking system: “Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees.”
The system led to employees competing against each other rather than with other companies, some times to the point of sabotaging their colleagues.
The decision to eliminate the stack ranking system is bound to prove popular at Microsoft and signals a clean break with the reign of outgoing CEO Steve Ballmer who presided over its introduction. According to Brummel, it will be replaced by “a fundamentally new approach to performance and development designed to promote new levels of teamwork and agility for breakthrough business impact”.
But just as workers at Microsoft wave goodbye to the stack ranking system, their counterparts at Yahoo are starting to vent their frustration at having something similar foisted upon them. CEO Marissa Mayer introduced a very similar system last year, known as the Quarterly Performance Review, which forces managers to rank some staff as “occasionally misses” and “misses” using the same bell curve methodology employed by Microsoft.
According to AllThingsD, Yahoo employees are using an anonymous internal message board to reveal their frustration and upset at the system. Comments on the AllThingsD article also reveal instances of people claiming to have fallen victim to office politics. One wrote: “From my experience, I see forced ranking as a tool for managers to deflect responsibility and to reward their favourites. Playing the political game and sucking up is much more important than putting your head down and doing a good job.”
Another writes: “Stack ranking is essentially fraud. When managers are directed to “fail” a certain percentage of their employees, even if they don’t think the rating is warranted, and these employees are given bad reviews that are unwarranted, then the employee’s career is being affected by lies told to them.”
It will be interesting to see what impact the quarterly performance review has on Yahoo’s own performance in the coming months and years. But it’s fair to say that employees (like their counterparts at Microsoft) aren’t exactly giving it glowing reviews of their own.
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