Hacker News Reader

Comment by plinkplonk | Hacker News Reader

"Stack ranking system was harmful:"

whoa! I didn't know Google practiced stack ranking. There is a lot of unnecessary stress generated at Microsoft due to this[1]. I would have thought the Google folks would be wise enough to avoid it.

As for ".... SVP response: “If you wanted to get promoted for these non-engineering tasks, move into management"

heh! How big company ish is that? The best way to join Google these days seems to be as part of an acquired startup. Then you are at worst running out any vesting period while enjoying those free massages.

[1] http://minimsft.blogspot.com/2005/07/microsoft-stack-ranking...

View on HN

I had to look up "stack ranking" just now, so, for the benefit of the class:

Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly.

That just seems completely asinine.

"Stack ranking means that if you have a group of 20 people, during each performance review cycle the group manager is expected to rank them from 1 to 20, and the company distributes bonuses and promotions accordingly.

That just seems completely asinine."

Worse, there is often an associated ideal distribution ("the curve") with fixed ratios for "exceeds expectations", "below expectations" and so on and managers are under pressure to conform. If you have an all superstar team, a certain number must still be in the bottom most bucket, and the bottommost 5-10 % is often let go or put on a watchlist (I am not saying this is how Google does it).

Over a few years this gets very political as you can imagine. The (bad) middle managers love this part of their jobs.

It does seem asinine. Although frankly I can't think of many ways that seem much better. Do you always just give everyone on your team the exact same bonus?

That's one option. Not giving bonuses at all is another option. Tying incentive comp to business events (recruitment, customer acquisition, an A/B test and minor feature change that produces a 1% uplift, etc) is another option. Anything has to be better than going out of your way to stratify an otherwise well-functioning team.

I just have a hard time believing incentives don't work. For example, if I lost all of my stock options today and was told I'd never get another raise or bonus, except CoL, I'd quit on the spot.

In fact I'd argue, if there were no financial incentives, most HNers wouldn't do startups. I know everyone likes to say they do it to change the world and the passion of something or other. But in reality I've yet to see many founders take a $50k salary only (but keeping voting power) despite the profits of the company.

Incentives work great. Incentives aren't the problem. The basket of formal performance-driven compensation programs colloquially referred to as "incentive pay" are the problem. Incentive pay includes:

* Formal periodic performance reviews

* Scheduled bonuses based on "job performance"

* Ranking of employees (this is the old GE performance management paradigm; "up or out!")

Losing all of your stock options or having something else taken away is not a negative case for incentives, it's an example of a disincentive, which also has an effect. They aren't the same thing, and you can tell because you don't know how well you'd be working if you never had the options in the first place (and hadn't been denied them or otherwise been treated unfairly).

One of the reasons you don't see many founders take a $50k/yr salary is that very few of them are truly confident of success. I once heard an aphorism, "don't trust a founder who won't put their own money into the company." It's a little pointed and unrealistic, but you get the idea. In an industry driven by a mythology of becoming the next big thing (parallels to the equally one-in-a-million mindset in the music industry), no founder can afford, professionally and with regard to reputation, to treat themselves as anything but a foregone success, and that attitude requires "competitive compensation." This means they want to be paid as much as other unsure founders.

The "low-salary superboss" is a product of already-successful companies.

Well I think I'd also turn down most jobs that said, "We'll pay $150k/year with no further financial incentives ever". Unless my goal was simply to to do as little work as humanly possible, yet still collect a check, I'd be hardpressed to work there. And if I did, despite non-financial that exist in the world, I really don't think you could get me to work more than 40 hours per week.

Are you really saying that you wouldn't work more than 40 hrs per week for < $150k. It's the money that makes you put in extra hours?

The thing is that there's a huge number of talented people out there who will put in extra hours because the work is interesting, or they feel that if they don't, they're letting the team down.

In fact, the really really talented developers seem to care less about money (after a nice base-line), and more about the work / team. Or, other obsessive (and useful) qualities make them unable to say no to work, etc.

So, who would a company prefer to hire? Obviously, the qualified person who would work for free, because it's their passion.

Interestingly, $150k/yr is a lot more than I've ever made, but that's neither here nor there.

Are you really saying that you wouldn't work more than 40 hrs per week for < $150k.

If there were no other financial incentives, absolutely. I have no problem saying, "No" to work. I bust my butt doing 100 hour weeks so that you can ship Mario Halo World and make $500M opening weekend, I deserve to be compensated. Even if I love the work, I can spend that 60 hours per week that you're not paying me to work on something else I love.

It's one thing to be RMS and working on your lifes passion for free. It's another thing to, as an employer, expect to ask someone to forego tucking their son in for the next 6 months, because you need to make $200M, but will not compensate them at all. I don't doubt there's people that will volunteer to do it out of some sense of passion or loyalty, but it won't be me.

I know what I'm worth.

And regarding $150k/year, saw your profile and you look young (although maybe you're not). Like it or not, you'll make more as you get more experience. Maybe that's reverse ageism, I don't know, but seems to be a fact of life, even in software, which is more meritocratic than most industries.

Also it appears you do game development. Unless you become a rockstar or do the next Angry Birds as a solo dev, you'll tend to get paid less than the industry average -- at least that's how it has been historically.

Your observations re: gamedev are correct.

Actually, I can't really stand working for other people, so I'm doing a startup. Now I work almost all the time I'm awake, and I make 0 dollars. Hmm.

So, what city do you live in? Does your employer have <10, <100, <1000, <10k, or 10k+ employees? Or, are you a contractor?

EDIT> I should point out that the highest-paying jobs I've seen advertised for non-management devs in Toronto are around 100k. Architects are like 120k. Then again, a detached house in town, near a subway stop is under 400k.

I live and work out of two houses and offices. One in Seattle and one in SF. Less than 100 people. I used to be a consultant... if you've never done it I recommend all devs to spend some time doing it.

The listed salaries in ads are just for where to start negotiations at :-)

In any case, if your start up does well, but not so well that you can retire like Brin & Page (exit w/ say $3-5M) you'll find that higher paying offers tend to come a fair bit easier.

I couldn't tell from your page (or I just missed it), what does your start up do?

> I couldn't tell from your page (or I just missed it), what does your start up do?

I'm developing an online, subscription-based game for PC and Mac.

> I used to be a consultant... if you've never done it I recommend all devs to spend some time doing it.

The problem I see with consulting is that to be really good, you need to care more about the client's project than your own stuff (or at least act that way). This is a problem for me, since (non-retirement) money is not a significant motivator.

This is also true of customers, of course, but there's a bit more leeway and leverage there.

> The listed salaries in ads are just for where to start negotiations at :-)

Very true.

> In any case, if your start up does well, but not so well that you can retire like Brin & Page (exit w/ say $3-5M) you'll find that higher paying offers tend to come a fair bit easier.

Interesting. When I reach that range, I won't be accepting offers -- I'll semi-retire. I'd probably work at building a personal submarine like Nautilus UC3 ($200k), doing AI research, building robots and making art.

You mention SF and Seattle. For comparison, in Toronto, you can get a beautiful house in an elite uptown neighbourhood on the subway line, starting at around $650k. If you move to the 'burbs, the size/price ratio just improves (but why would you want to live in the 'burbs :)

It's not only about the money, but it's still about money. No matter what the company's 'mission', anything that changes the distribution of equity or profits will bring out that truth awfully quick.

An insight gleaned from Donna Meadows is that profit is not the purpose of a company's existence. Profit is merely survival, it's what facilitates the company staying "in the game".

Her view is that the purpose of companies is to grow.

That observation was made by Peter Drucker, fairly soon after WW2. Profit is the cost of continuing to do business; it's necessary to ensure that you are allocating your efforts efficiently, but is not the intrinsic raison d'etre of a corporation.

His view was that the purpose of companies was to serve a social purpose. The purpose of Google is so that people can find information. The purpose of Microsoft is so that people can use their computers. The purpose of Merck is to keep people healthy.

I like this viewpoint a whole lot better than Milton Friedman's corruption ("the purpose of a corporation is to increase shareholder value"), where an abstract measuring stick necessary to ensure corporate accountability somehow became the whole principle that society was organized around.

Thanks for correcting me.

In certain companies, bonuses are dependent on three factors: company success, team success, and individual success, based on targets agreed upon at a certain point in time.

To me, that seems a lot more fair than implicitly believing all members of a team are of equal levels of skill, productivity, etc.

It is obviously true that people should be compensated for company, team, and individual success.

It does not follow that the way to do that is a rigid, formal cycle of performance reviews and ranking.

No, of course not. I did not mean to imply that.

I work in a company like that - and the system sucks - especially now in downturn.

Here's why: 1. Some managers (of sub-par mind you) teams scored whole their team as "excelent" - as to compensate for lack of company success. Then when the MGMT figured that out - they implemented ratio - thus again hitting the team with many excelent overachievers, etc... 2. Myself personally am often transfered from f-ed up project to a f-ed up project (since I have the ability to mostly turn them around or help to mitigate the damage) thus ensuring that I will never be compensated for the level of effort necessary to turn around a f-up.

This system just makes me sick - because I want to compete but I don't want for my collegues to suffer because of it - currently it just encourages teamicide. So this kind of scheme appears to demotivate over-achievers more than it motivates under-achievers.

Not only is it very political, but it forces some baffling decision making.

Assume I have a team of 10 in which 5 are wonderful contributors, and that, due to stack ranking practices, only the top 1/3 of my team gets consideration for big bonuses and promotions. Here, I'm incentivized to immediately hire 5 warm bodies, thus ballooning my team to 15, so that the top 1/3 get the recognition they deserve.

It's actually rational to do that if I'm concerned that those 5 excellent performers will leave without that recognition. The incentives that appear due to stack ranking are really, really bizarre.

Hiring is difficult and time consuming, what you really want is a re-org (which are all too frequent at big software dev. corporations).

I left my job at BigCo because I was part of a 8 person team where the manager was supposed to create a normal distribution out of scores from 1-5. I was one of two employees recognized for doing an excellent job, but my manager could rate just one of us as "excellent".

During a performance review, my manager talked for an hour about how much I'm contributing and what an amazing job I do. Then he ranked me as average. I was extremely disappointed because I wanted the awesome job I do to get more official recognition.

I started searching for a new job almost immediately and left shortly after.

So yes, review systems considered harmful.

This is actually how almost every large company works. Scale is 1 to 5, average is a 3, 2 is exceeds expectations, "Nobody ever gets a 1."

The problem is that the grading is done on a curve, so that for every 2 given out, someone else must get a 4. If you get a 4, you are considered below expectations, and must be put on a "personal improvement plan," or managed out of the team.

Because of this pressure, nobody wants to give out anything other than a 3. So they resort to stupid tricks like giving out "high 3s" or "low 3s" instead of 2s or 4s.

The desire to model employee performance with data and manage out the bottom 10% has a crushing effect on the morale of any small technically focused team.

Even smaller companies can work this way. During last year's review, my manager (who is also a lead developer--heck, even the VP of engineering writes code on a weekly basis) told me that he wanted to score me higher, but some people frowned on such things because "people really can't be that good."

It doesn't bother me much because our department is fairly sane in how they deal with reviews, and management in general.

Agree. I work for a small company who occasionally like to act like a big company; we have a similar system which used to be hooked up to bonuses, but they eventually removed those. The explanation was pretty obtuse, but reading between the lines there were some employees getting bonuses even though they should objectively have been 4s or 5s on that scale - because of course everyone got 2 or 3 regardless.

I left a BigCo job for the same reason.

Interestingly enough, I learned in my HR class just last night that stacked systems are disastrous. Any modern HR dept. should not be using them.

When I was a team leader, I was asked to rate my team members on a curve. Management stressed that this was important, and that we all had to conform.

I told my boss I had no intention of destroying my team, and handed out ratings and reviews as they were deserved.

Never heard this particular line from Management again.

I was in a place that decided to give out bonuses to my team (consisting of 3 members and a leader) in the following way:

1. Allocate fixed amount to give out per team

2. Have team leader's manager determine how that pie would be shared between team leader and us 3 team members.

3. NOT have 360° feedback

4. Incorporate team leader feedback on team's performance into this decision

I'm not sure what type of HR schmuck thought up that scheme. About a month after 'self evaluation', we were called into 1-1 meetings with the TL, who told us each separately how disappointing our performance had been, and the usual spiel about 'taking initiative' and 'stepping up' and 'moving to the next level'.

Shortly after that we found out the three of us had received 0% each of the pie allotted to our team as a bonus. And the team leader had waltzed away with ALL of it.

That's right: an allegedly disappointing team who'd failed to achieve any of its goals was compensated for by a super-human team leader who had somehow magically overcome all our shortcomings to over-achieve so much, that even the organisation-wide "curve" was left by the wayside to reward such awesomeness.

It sounds like your manager actually suffered a bout of insanity or was a thief.

I'm guessing thief. It's where the incentives lead.

This kind of nonsense is why I became a consultant. I get my bonus every day now and I don't have to do any go through the "performance review theater" anymore. If they really have a problem with me then don't renew my contract. It's simple and honest, just how I like it.

I once worked at company that employed a lot of hourly wage type people. One exec wanted to stack rank each group of wage employees each month and fire the bottom 25%. I tried to explain to him the negative morale effect that would lead to lower performance across the board, the fact any employes who were decent would just leave on their own, and there is a significant training cost for each new employee that he was ignoring. But nope, he wanted me to write the system anyway.

Thankfully someone higher up with a bit of sense got wind of the plan and nixed it. It wasn't too much later that the original exec was canned.

This is what Jack Welch did at GE in the 80s, firing 10% of management every year. It's not universally derided as an HR/Management policy. I mean, it's pretty much the entire premise of the TV show "The Apprentice," no?

Pro: http://www.cogmap.com/blog/2009/11/12/force-ranking-to-fire-...

Con: http://www.missionmindedmanagement.com/where-jack-welch-got-...

I had a lot of respect for GE until not that long ago, but I think that after things like these (http://accounting.smartpros.com/x67325.xml) we shouldn't take this company very seriously. They're just crooks like the rest of Wall Street.

>firing 10% of management every year

that is completely different. All stack ranking mentioned so far was about employees. Firing 10% of management every year have real potential to improve morale.

It bears mentioning that the long view of GE's history is becoming increasingly unkind to Jack Welch. He's starting to look pretty bad and short sighted in many respects. His legend has already been cemented, though, so I doubt anyone will care.

Maybe I missed it, but your 'pro' article doesn't link to the study that is referenced. I would like to see what kind of work the people were doing who were tossed. For example, in my experience most companies have way too many middle management. In that scenario it makes sense to cut no matter what so go ahead and use some performance metric (and definitely don't wait a year to do it).

Then you have rank and file employees are are actually doing the work. Even in a relatively low skill position the company might have to put in 1-2 months of training to have an employee functioning. Unless the employee is completely horrible (in which case they should be fired anyway, and if this keeps happening hiring practices should be analyzed), from a cost standpoint it makes more sense to coach them to do better rather than remove them.

In higher skill positions it makes even less sense to just cut the bottom unless the bottom is doing very poorly. In that case they should have been cut prior to ranking. Where I work now we don't expect someone to get fully up to speed until they have been in our codebase for 3-6 months. If we constantly ranked, fired, and hired again we would only have a few good people at the top end doing all of the work and simply churning money on the bottom end. We might find a superstar who displaces the top, but does that mean you want to fire your previous tops? They were doing fine, and presumably still are, until the superstar showed up.

Again, I have no problem with ranking people or with firing people for poor performance. The problem is picking an arbitrary line and firing people who fall below it even if their raw performance is acceptable.

Stack ranking means just that: the employees are ranked. What the company does with the ranking can vary. The uses of a stack rank can be beneficial or harmful.

At one company where I worked, the rank was used to identify employees for promotion. If an employee consistently ranks above employees at a higher level, then the employee should probably be promoted.

The company also merged the ranks for smaller groups into groups of one hundred or more. This resulted in more consistent reviews and promotions across the company.

I consider these uses of stack rank to be beneficial.

The company also did something harmful with the stack rank. The company graded on a curve and used the stack rank for the grading. Even if everybody in a pool is doing great work, somebody needs to be given a bad review.

The problem with any sort of ranking sysyem is that skill sets, jobs, projects, and roles are not freely fungible or normalizable. You're forced to make some totally absurd comparisons for the sake of fitting whatever the mold may be. We're not talking apples to oranges here; we're talking apples to watermelons.

In the stack rank meetings that I was involved with, we ranked employees in the order that we would hire them to a new team. This ranking considered several things: productivity, ability to drive tasks to completion, quality of code, willingness to help others, personality and more. Although it was like comparing apples to oranges, there was usually a consensus on the ranking.

A useful aspect of this ranking is that it's a different perspective from the written employee review. The review measured people against goals agreed to at the beginning of the review period. The stack ranking criteria considered more of a person's contribution. An employee could suck at meeting goals, but come out high in the stack ranking because of other things the employee did.

I like the idea of a consensus assessment. Sometimes a person's value to the team is less quantifiable on paper than someone else's, but that doesn't mean it's intangible. It's usually quite tangible, and if everyone notices it (or the reverse), that's usually a good sign of the person's value-add. Not everyone is going to be the tireless codebot on the team, but that doesn't mean everyone isn't playing a critical role (Joel Spolsky obviously goes on at great lengths about this). Consensus-style reviews would probably arrive at a fair assessment of such value a lot more readily than individual writeups would.

Also, a lot of people make critical contributions that just don't get noticed by the team lead because those contributions -- moral support, culture, taking time away from one's own work to assist others -- aren't boss-facing. But if you asked his or her peers, this person would get a stellar review. In situations like these, group feedback seems pretty important.

There are many, many ways to set up a stack rank system. People that I know who have worked at both Microsoft and Google far prefer Google's system. That is not to say that they find Google's system perfect. Just significantly preferable to Microsoft's version.

As a Google employee I am not at liberty to discuss what the differences are.

That's interesting. I'm guessing these are Microsoft employees who quit before the perf review system here at Microsoft was basically changed from scratch 3 years ago?

I've heard comments from people who were at Microsoft for a long time. I don't know the specific timelines of the people involved, and so can't tell you what time period their comments specifically referred to.

The massages aren't free. They're subsidized at $20/hour.

I was thinking the same thing ('oh man, i bet a Microsoftie could have created the same deck back in the mid/late 1990s...')

Reply on news.ycombinator.com