Lately I’m seeing a bit of a buzz around a Vanity Fair article written about Microsoft’s annual stack ranking process along with a commentary in Forbes about the same article. There’s some strong words used in the articles, such as “terrible management technique,” “devastatingly destructive,” “effectively crippled Microsoft,” and “cannibalistic culture.” I’m willing to bet much of the outrage over this technique (which Microsoft didn’t invent and has certainly been used by many, many large companies) has more to do with fairly uninteresting stock price growth, or lack thereof, especially when compared to the Apple rocketship.
It’s important to keep in mind that the verbage I quoted above is being used to attract readership and sell ads. That doesn’t necessarily mean that it is wrong though.
If you are unfamiliar, here is stack ranking in a nutshell: Instead of evaluating employee performance against an objective metric, employees are ranked against each other, from best to worst. Some criteria are applied to make the samples meaningful, e.g. employees are ranked against others at their same career level and within a right-sized organizational unit (not too large or small). Then a curve is applied by policy; in Microsoft’s case, the top 20% are considered top-performing and the bottom 20% underperforming, with the middle 60% somewhere in the general vicinity of “average.” Keep in mind, these rankings have very little to do with what an individual’s actual performance was as compared to an objective metric; in a stack ranking, performance is all relative.
Here’s some other interesting quotes from the Vanity Fair article: ”It leads to employees focusing on competing with each other rather than competing with other companies.” Further on, it reads: ”It was always much less about how I could become a better engineer and much more about my need to improve my visibility among other managers.”
From my experience, those last two statements are pretty much spot-on. I clearly remember being told that in order for me to improve my performance at Microsoft I needed to focus on making myself look better than the others on my team. It was about this time I thought I should start looking around for a new gig.
It’s important to understand why, though. It wasn’t because I was unable to perform well at Microsoft or that I was unable to execute as well as my peers. It was because I don’t want to work in that kind of an environment. It goes against things that are central to my very core.
C.S. Lewis said: ”Pride gets no pleasure out of having something, only out of having more of it than the next man. . . . It is the comparison that makes you proud: the pleasure of being above the rest.” On the same topic, Ezra Taft Benson said: ”Another major portion of this very prevalent sin of pride is enmity toward our fellowmen. We are tempted daily to elevate ourselves above others and diminish them.” And Jeffrey R. Holland said we need to work to “escape our culture’s obsession with comparing, competing, and never feeling we are ‘enough.’”
Those quotes go a long way in describing my feelings on the matter. In my view, to promote a practice wherein people are forced to compete and be compared against one another is to encourage behavior that I consider sinful: pride, backstabbing, gossiping, fault-finding, etc. It is sinful in that it encourages behavior that is not Christlike.
How much better instead to let individual employees work as teams and only compare themselves to an ideal they help to set for themselves! I may never become the kind of software engineer or husband or father that I could become if my main concern is that I’m better than my immediate peers. I can instead choose to evaluate my performance against my own ideals and be continuously working and growing. The role of a manager in this environment is to coach and mentor, not to compare and punish.
One area where I disagree somewhat with the author of the Vanity Fair article is where he suggests this is an “astonishingly foolish management decision” made by Microsoft. To say such a thing implies that the leadership making this decision is not smart enough to see beforehand the implications of this policy. Whatever a person may choose to say about Microsoft employees, at any level in the company, “foolish” is not a word I would use to describe any of them. In my time there I met many individuals at many levels, and to a person every one was incredibly smart, perceptive, aware, and intelligent.
Why would smart, perceptive, aware, and intelligent people then promote a policy that seems so wrong? I give them the benefit of doubt. I assume they know exactly what they are doing. Such a policy will select favorably for people who are willing to do whatever it takes to win, and will adopt any tactic and step on whoever they need to step on to get there. I don’t believe everyone who is successful at Microsoft is like this, mind you. But it certainly describes many of the successful people I knew there. If I wanted to create a culture and a company full people who will do whatever it takes to win, establishing a policy that rewards such behavior is not foolish, it is brilliant strategy.
One critic of the article pointed out that the former employees interviewed may have all been rated poorly, which would certainly skew the numbers. It’s a fair point, but misses the mark. The comment also makes two implied assumptions. The first is that the people who leave are mediocre in their profession, which I can almost assure you is nearly universally not true. The second is that they left out of frustration with the policy. This is probably true for some number of former employees, but people leave companies for lots of reasons. Some may have left because of the policy, not because of frustration, but rather because it does not align with their values. This was true with me.
So, read the articles and come to your own conclusion, but don’t assume Microsoft doesn’t know what they are doing. I think they are very intelligently going about trying to create the exact type of culture they want.
Whether that type of culture can remain competitive in the long term, well, that’s a completely different question.
P.S. I also wrote about this topic here, a couple of years ago.