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Comment by vonmoltke | Hacker News Reader

You are absolutely right, and that is what Jack Welch intended when he first implemented stack ranking at GE in the early 90s. At the time GE was overly large with an ossified bureaucracy and thousands, if not tens of thousands, of deadwood employes who were just coasting along occupying a chair. It was killing the company. Stack ranking was the answer to forcing managers to make the hard decisions about who was really helping and who was just collecting a paycheck. It worked very well.

This was only supposed to last as long as required to turn GE around. Like all good fads in the business world, though, it was taken too far by the MBA crowd. They now see stack ranking as a great permanent solution to deadwood. They fail to recognize that: 1) all organizations have a certain minimum amount of deadwood, as a function of their size; 2) once an organization approaches its natural level of deadwood, stack ranking hurts more than it helps.

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how do you apply stack ranking effectively if most of the dead weight is in the branches (middle management) but scoring heavily weights the leaves (workers) of an organization?

My feeling is that generally a group knows who sucks or is disruptive, and this is probably the most reliable data source. That's your scoring criteria. Other modifications I might make:

1. flatten the org chart for the purposes of ranking. 2. employees rank best and worst fellow employees, i.e. up to 10 best, up to 10 worst. 3. ranking is two-dimensional to distinguish between "this person is terrible and should be fired" from "this person isn't a good fit/being utilized well and should be moved". 4. Do the above and see if the results can be used to determine who should be fired. 5. If you want to repeat this process every year don't set forced quotas.

Agree. I am sure Yahoo has some cruft at the lower levels, but I would imagine that the real problems are in middle management, where many of the worst are the most adept at playing the game with the higher ups after years of practice. I really do not know of any great ways of solving this, but I have seen the problem many times in companies of similar size.

From what I remember, Microsoft has the employees rank their peers. 360 feedback. That's part of what then poisons the atmosphere, especially since of 10, the sucker in last place often/always has to leave. People implicitly then make pacts based often on politics... But at least it's annual rather than quarterly.

yeah, no system is perfect, but the modifications I suggested I think would address these issues to large extent. For example, I suggested that employees would rank their peers on three scales (good, bad, misused) instead of with "scores". An actual score would hopefully come from aggregating the whole company and doing some analysis. Hopefully by having some smart people try to put together an algorithm that seems "fair".

Also, if I remember correctly, MS employees might have had some say in their peer's rank, but then groups scores would be merged with other groups by having managers "calibrate" with each other, which more than likely gives the manager a lot of control in the final outcome.

This is not a condemnation but people often like to invent perfect employee performance systems, as you have done here, and it is akin to people writing their own cryptography. There is evidence-based research out there - look for papers by Elaine D. Pulakos for example. My understanding is that no system works in and of itself and training managers to get the most out of their people is probably the best thing any firm can do.

how do you apply stack ranking effectively if most of the dead weight is in the branches (middle management) but scoring heavily weights the leaves (workers) of an organization?

I'd make the system ignore the scores of any bottom ranked management.

1) all organizations have a certain minimum amount of deadwood, as a function of their size; 2) once an organization approaches its natural level of deadwood, stack ranking hurts more than it helps.

Like fingernails. You never cut the fingernail right up to the quick, you always leave a little bit behind...

It wasn't supposed to be only until GE turned around. It was meant to be a permanent fixture in their HR policy.

When Jobs rejoined Apple there were huge layoffs and a cleaning up of projects. But it was never permanent, he struck hard and it was clean. After that the company could focus on innovating and not fear politics of stack ranking. Can you imagine if he kept that system in play, would Apple have been as successful?

Keep in mind that the whole office still had the fear of Steve Ranking, i.e. the fact that Steve Jobs was a dictatorial asshole who just so happened to also have good design sense. More importantly it's very dangerous to start generalizing from Apple to the whole technology industry, considering that you'll probably convince a number of otherwise underperforming companies that their best bet is to have an asshole CEO.

You state your two final assertions as if they're universal laws. I'm not saying you're incorrect -- they certainly sound valid to me -- but can you point to any research to back up your claims?

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