Analyzing one of American corporate history’s greatest mysteries — the lost decade of Microsoft — two-time George Polk Award winner (and V.F.’s newest contributing editor) Kurt Eichenwald traces the “astonishingly foolish management decisions” at the company that “could serve as a business-school case study on the pitfalls of success.”
Relying on dozens of interviews and internal corporate records — including e-mails between executives at the company’s highest ranks — Eichenwald offers an unprecedented view of life inside Microsoft during the reign of its current chief executive, Steve Ballmer, in the August issue...
Eichenwald’s conversations reveal that a management system known as “stack ranking” — a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor — effectively crippled Microsoft’s ability to innovate.
“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,” Eichenwald writes.
“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,” says a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”
When I read that section, I immediately recognized similarities with programs at former employers.
This is not a comfortable post to write, but I believe it is important to learn from management and business failures as well as successes. Clearly programs like "stack ranking" are destructive for organizations and individuals. The sooner managers and human resource departments learn that lesson, the better for the business and its team members.
Is "stack ranking" something you've encountered?