If your company does 360 reviews or has a "rating" system (smart companies refuse to call it a ranking), it's the same thing. It's in the corporate america HR handbook. If you are ranked highly, someone had to be ranked lowly.
What that DOES mean, though, is that someone has to keep pressure on people not to rank everyone as awesome. Because, look:
a. Managers are, contrary to rumor, people too. We don't enjoy the awkward, painful meetings in which we deliver negative feedback. We don't enjoy telling people that they aren't getting a raise, or that they need to improve or be terminated. That sucks. Personally, it keeps me up nights, and I've heard the same from many other managers.
b. Managers are also graded themselves on how effective their employees are. Like, if your employees are persistently rated below average, well, what's the common factor across your employees? Vice versa if they're all high performers.
So if you just tell managers "rate your employees, follow your conscience," then there is a grade inflation incentive. Even if you're super-disciplined and make painfully realistic assessments of your employees' abilities, Bob one team over may give everyone fives, and then you end up looking like a bad manager and also maybe you get to go and put someone on a PIP.
The company needs some way to stop this. Stack ranking is one such way. I don't like it, I think it's overall a bad way, but it's a mechanistic way, which is more valuable the larger your company. Small companies can have a powerful manager or small group of managers who "keep people honest." That doesn't scale.
You can use another mechanic to keep people honest, but all mechanics are exploitable.
But look, inflation is bad. If grades aren't inflated, and I rate someone a 3, then we say, "This person is a solid employee. We're happy they're here, we're giving them an average raise, everything's cool. Do we have a little constructive feedback that says, 'Hey, here's how you could take it to the next level?' Sure. But we're happy with them."
If grades are inflated and I give someone a 3, then oh shit, maybe they're in trouble! Because some asshole had to give everyone in his team a 4 or 5, and now my solid employee looks like he's underperforming the company average.
The fact is, a solid 4+ rating means you're a really great employee. Teams that are all high performing are super rare, and tend to be really, really, really obvious within a company.
Now, is it a valid criticism of stack ranking that it makes it not just difficult but impossible to describe a team that's solidly above average? Yes, absolutely. Stack ranking is kind of dumb. But understand that despite interesting and compelling stories about people being unfairly rated lower than they deserve, that's not the big problem that companies face. In general, the incentives for everyone is to rate people higher than they deserve, not lower (with toxic exceptions like what Fowler faced). And if you set up your whole system to make really sure that it embraces the idea of everyone being super awesome, you probably don't get a highly functional rating system out the other side. It's probably better to set one up that embraces the idea of average teams (average for your company) and let people override the system when you say, "Oh my god, this entire team is just killing it this review cycle."
Teams that don't fit a normal distribution are incredibly common.
And I think the bigger problem is money allocated for pay increases.
If the average 3 rating employee in your team can get a 10% annualised return each time they change jobs then the company should be budgeting 10% for a grade of 3. In practice this doesn't happen.
This doesn't make a team of high performing folks any less rare because extremes tend to be rare. It just means that reality doesn't always look like the average. You might have no high performers but 5 average ones, or 2 high performers and 3 below average (maybe they are just learning?).
One team out of many being high performers might just be luck or a good manager, for sure, but it definitely warrants checking things out because of the rarity. The same would go for an entire team that is below par without obvious reason. It might not even be an issue with the supervising manager themselves, but with the way the company scores that sort of team.
Yet it will get you maybe 2-5% more pay.
I see lots of new devs working at way under capacity because it's just not worthwhile for them to work harder for a company.
> > Now, is it a valid criticism of stack ranking that it makes it not just difficult but impossible to describe a team that's solidly above average? Yes, absolutely. Stack ranking is kind of dumb.
The ranking of people requires either one of two things:
1. fitting your group of people to a bell curve regardless of their proper distribution in reality
2. ranking inflation or deflation
Seems like a broken system designed either to generate make-work for managers and HR or to give the illusion of personnel manipulations to improve performance.
Like, say your team didn't hit its OKRs. Should that mean that your manager has to make the average of your team's ratings be below 3? Certainly, one reason why your team failed to hit its numbers might be because most or all members of the team are poor performers. But it might also be that your manager didn't organize your work well, or it might have been that your numbers were unrealistic.
It's a delicate balance and, as a director myself, I don't claim to always get it right. But the goal I aim for is: if we have a good manager hiring great people and a mediocre manager hiring mediocre people that we calibrate correctly across those managers rather than claim that one is inflating their rankings.
With this in mind, it makes sense to grade the manager. If a manager has a lot of poor performers, they might not be giving staff the training, support, and feedback that is necessary to improve. If they all get high scores, they might be grading too easily. I'm guessing they have controls to help lessen this.
1. Each manager gives their people an absolute score
2. A meta-manager checks in with all managers over the course of the year and keeps tabs on performance of a randomly selected group of people (some scalable fraction of the total workforce. As this number goes up you could hire a few more people to do this job).
3. Each meta-manager looks for obvious goofy scoring discrepancies (how can person A have a lower rating than person B?).
4. Each manager is on the hook to defend those ratings in the face of scrutiny to justify why they rated Tony Terrible better than Andy Awesome. This expectation of accountability prevents them from inflating their scores too much.
Sort of like QA for management assessments.
The person voted isn't necessarily made to leave. It's an opportunity for them to focus on improving themselves personally, possibly in a program.
This a genius idea. That way you push the liability of discrimination from the company to the employees at an individual level. It's like mob rule but for companies.
> The person voted isn't necessarily made to leave. It's an opportunity for them to focus on improving themselves personally, possibly in a program.
I can't begin to imagine how awkward it would be to be voted off the island and stick around anyway.
This isn't the worst idea ever, for that you'd have to include knives or acid.
If you did this to me or made me participate in this I would definitely tell you off and walk out of the room, clean out my desk, and leave.
The problem with stack ranking isn't that employees can be ranked higher or lower than one another (as in any normal rating system), it's that you absolutely have to give someone a failing mark, even if no one actually failed.
This means that if you get transferred to a team where everyone is highly skilled, then you run a real chance of being the person who gets ranked terrible and can never get a raise or promotion unless your other teammates leave – or unless you sabotage their progress or refuse to help them in an effort to try to lower their performance.
It's a perverse form of letting bugs slip through careful coding and design practices when they are far cheaper to fix, and letting them loose into production facing customers when they are way more expensive (monetarily and soft factors) to resolve, but in the hiring and retention realm.
I learned about stack ranking the hard way. When I quit, it caused all sorts of commotion, culminating in the CEO personally calling me to nicely and politely ask me to stay, far contrary to my worst-slot ranking would suggest. That opened my eyes to its drawbacks. I can see a use case for stack ranking as a leadership tool in situations with clear featherbedding, but when used as a permanent policy it's management cargo-culting at best, Jack Welch fetishization at worst.
If any readers ever find themselves in a similar situation, do not explain the details of why you refuse to stay on, as that only cracks opens a door to high-pressure negotiation. Easiest way out is simply state you already accepted a very attractive offer, if pressed for details respond the other company swore you to not disclose the terms to anyone, and stay polite.
Like a proper diet and working out where there is no substitute for doing the work, stack ranking rarely if ever substitutes for accomplished, attentive leadership (as contrasted with tactical aspects of management, a core prerequisite to said leadership). It is a useful scalpel if/when wielded properly, and is best left in the toolbox otherwise.
If you're seeing widely varying ratings of a single person that seems like it'd be a big red flag - if the boss says 1 or 2 but coworkers or reports average 3.5+ that's a situation that seems to cry out for further investigation. Similarly, if the boss says "4" but coworkers and reports average 1.5, there's probably also a serious problem.
I'm sure investigating involves costs that companies don't want to incur, but if you have that kind of disconnect going on it may be cheaper to investigate and resolve it than to deal with the eventual fallout.
I've seen the personal aftermath of bad bosses and work environments on people in the past, and it's really not pretty. If you're talking with someone about work and say "Mean Girls" and get a response of "Oh my god yes!" that's a pretty good indicator of a toxic work environment.
Damn straight and that's a natural side effect of having a pool of limited resources (i.e. bonus money and promotions) to offer.
Also note that MBAs and other business types have learnt to game the system by providing 5 star all around. Why? Your average tenure at a company is low (2-3 years). You need your peers for your next job. Why denigrate each other.
It seems engineers are not smart enough to game the system and actually rank each other honestly. Whereas the business and law guys know better.