Managing For Performance: Why Stacked Rankings Really Make Sense

Microsoft CEO Steve Ballmer
Microsoft CEO Steve Ballmer

Years ago, I was asked to keynote a corporate event for Microsoft’s HR team.

I didn’t have a fully developed point-of-view about HR and talent, just yet, but I said yes because it was a great honor.

I did OK. I didn’t suck.

The day was notable because my friend Lance Haun came to see me speak. I wore a fabulous Trina Turk red dress. I was also wearing a pair of Vera Wang heels but Lance told me to ditch the heels and put on a pair of insanely fabulous Cole Haan boots that zipped to my knees.

LFR was born.

Following Microsoft’s Steve Ballmer …

Before I took the stage, Steve Ballmer opened for me. I am not exactly sure how to describe the experience of following Microsoft’s CEO except to say, F@#& yeah, Steve Ballmer opened for me. How you like me now?

And I have to tell you that listening to Ballmer was inspiring. Do I own any Microsoft products? No. Did I get a nice paycheck and a cool t-shirt from the event? Yes.

But I really do believe that Microsoft is an important company. Google gets legitimate props for building an entrepreneurial and innovative company; however, Google+ is exhausting and those Google glasses are ridiculous.

Stacked ranking? It’s like Glengarry Glen Ross

Anyway, Steve Ballmer and Microsoft have their faults — but they also get a bum rap for a practice called stacked ranking. It’s like the Glengarry Glen Ross version of performance management. Do you know it?

First prize is a Cadillac Eldorado. Second prize is a set of steak knives. Third prize is you’re fired.”

But having worked with hundreds of companies, I know that all versions of performance management are variations of forced ranking and stacked ranking. This is why people hate HR.

First prize will always be a car. Second prize will always be a reminder that you didn’t win first prize. And third prize is you’re fired.

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http://www.youtube.com/watch?v=8kZg_ALxEz0&feature=em-subs_digest-vrecs

Having honest discussions about performance

There are new technologies and methodologies out there that can improve the performance management process to some extent. Managers should lay out clear goals and expectations and coach people to improve their performance.

But goal-setting happens at Microsoft and plenty of other mature companies — except that managers have honest discussions with employees about the very tight labor budgets. The stakes are higher. Being in the bottom 10 percent of a profitable company that actually has the means to award raises and bonuses is an unfortunate place for you to be.

Step it up or get fired. That’s not an unreasonable request from your boss. Want to do it differently? Go start your own company. (Please. We need better companies out there. Do that.)

But don’t be fooled by people who talk about a crunchy-granola way of managing for peak performance. Stacked ranking and forced ranking may not outwardly happen at your company, but it happens.

The fact that you don’t know about it is why you are not in charge.

Find more from Laurie Ruettimann at her blog, The Cynical Girlwhere this first appeared.

 

Laurie Ruettimann (LFR) is a former Human Resources leader turned influential speaker, writer and strategist. She owns a human resources consultancy that offers a wide array of HR services to human resources leaders and executives. Check out her LinkedIn profile here. You may know Ruettimann as the creator of The Cynical Girl and Punk Rock HR (retired), which Forbes named as a top 100 website for women. You may have also read her book, I AM HR: 5 Strategic Ways to Break Stereotypes and Reclaim HR. (RepCap Press, 2014.) 

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3 Comments on “Managing For Performance: Why Stacked Rankings Really Make Sense

  1. I worked at a large software company that had that philosophy. The problem was that lots of managers regularly hired C players so they could put them up for firing in the next year and protect their otherwise high performing team (well, in their world view) from the annual process. I wonder if there’s any system you can’t game?

    Oh, and when we were building a performance mgmt app, our internal TLA for it was RRR – Rate ’em, Rank ’em, Riff ’em.

  2. Read last year’s Vanity Fair article and you’ll see how disastrous stacked ranking was for Microsoft. Strong team members REFUSING to work with other competent team members. It’s a huge driver of why Apple’s iPhone alone generates more revenue than the ENTIRE Microsoft suite of products.

  3. Laurie, the fact that ranking happens is not the problem. The problem is the accountability equation and organisations having the intelligence to recognise that performance is down to much more than individual agency. To sharpen this point, take a look at the work of Reason (1997), ‘Managing the Risks of Organizational Accidents.’ Human error is not a cause, it is an outcome. Most ‘errors’ are not accountable to poor performance by employees at the sharp-end upon investigation, they originate towards the blunt-end further up the system. This is one reason why major accident investigations rarely find ‘human error’ to be a cause. Moreover, within an organisation, firing misses the antecedents of performance that does not come up-to-scratch. If ignored, this vital resource and opportunity for universal improvement will prove costly.

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