The management technique that could kill your company

A screenshot showing Vanity Fair’s critique of Microsoft. According to the article, a management technique known as “stack ranking” has spurred legion talented engineers to leave the software behemoth. Source: Vanity Fair

If anyone ever suggests your business employ “stack ranking”, don’t do it. At least that’s the verdict some have reached after Microsoft embraced the technique.

Before its August issue even hits newsstands, Vanity Fair is making waves on the internet with an analysis titled Microsoft’s Lost Decade, which many expect to rain heavy blows down on the company’s performance under current boss Steve Ballmer.

According to the article, which Vanity Fair has previewed online, Microsoft has failed to keep up with once bitter rival Apple in part because of a management technique it uses to rank all employees within a business unit either as top, good, average or poor performers.

“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 article’s author Kurt Eichenwald writes.

Even more scathingly the preview cites Eichenwald as describing “astonishingly foolish management decisions” that “could serve as a business-school case study on the pitfalls of success”.

At the heart of this, Eichenwald maintains, is “stack ranking”, which forces the categorisation of a percentage of employees in each level of a four tiered scale ranging from top to poor.

Vanity Fair quotes one unnamed former Microsoft developer as saying, “If you were on a team of 10 people, you walked in the first day know 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 ... It leads to employees focusing on competing with each other rather than competing with other companies.”

Website Geekwire quotes out another former Microsoft developer, Stephen Toulouse, who also attacks stack ranking as a staff management technique. Toulouse, who worked for the Seattle-based software giant software company wrote to Geekwire in response to an article previewing the Vanity Fair piece.

“It’s an incredibly demoralising message to hear someone say, ‘During your review period you worked 80 hour weeks, exceeded your documented task, and to top it off you fed a multitude with only a fish and a loaf of bread! Unfortunately someone else in your peer group did all of those things plus walked on water and therefore you will be getting a lower compensation ranking,’ Never mind having to come home to a spouse and explain that your work/life sacrifice the past year isn’t going to yield what you thought it would thanks to an arbitrary model. Now imagine you’re a manager and you have to deliver that message!”

The full Vanity Fair article, including its critique of Microsoft’s stack ranking approach, will be available in the magazine’s August issue.

READ NEXT:

• What to do when you feel like a fake at work
• Why you may want to stop setting goals
• How to prevent a CEO crisis
• Why women are better at networking than men

• Tweet