Microsoft ditches the stack ranking system. Yahoo lays off 600 because of it

Good grief

"...Yahoo! has recently laid off about 600 employees based on a ranking system introduced last year..."

No. Yahoo has laid off people because the business cannot support that number of employees. Stack ranking is just the tool used to make the decision.

The problem for any good-sized business is this: in difficult times, how do we make the decision who to lay off? People want to go on the warpath about stack-ranking, and that's great, but it doesn't address the problem.

So a story about why Yahoo is downsizing would be interesting. A story about stack-ranking alternatives would be interesting. One mixing up the two concepts in order just to keep some bullshit narrative alive about stack-ranking? Just to get some reaction? Not so much.

I'm still waiting to hear what Microsoft has come up with to replace stack-ranking, because there has to be some kind of plan. Instead, we seem to be on a merry old witch hunt after any companies who dare to use the phrase "stack ranking" in their employee evaluation policy manual. The greater discussion is not advancing too well.

I don't see the point. Seems to me that the only scenario in which stack ranking is actually efficient is exactly when you need to lay people off and have to figure out who you'll miss the least.

Lay offs are never a nice stress free process, any system you use to determine who to let go will suck badly for everyone involved.

For those who know me , I hate to say "i told you so" but i've predicted mass lay off coming to yahoo and it's not over. Their new ranking system is just an excuse.

Since the beginning of Marissa's binge buying, the goal was only to pump the stock up, not to make Yahoo actually relevant. There is no long term strategy whatsoever.

Stack ranking makes managers irrelevant to employee performance: The lowest employee is going to get sacked, so there's no reason for the manager to work on that person's performance. The highest employee doesn't need a manager. The remaining middle can be dealt with next year.

Maybe stack ranking replaces low performers with high performers, but only if you make managers irrelevant to the hiring process, because we keep hearing that managers don't know how to hire.

All that's left is for the manager, once a year, turn in a ranking list.

I wonder if all of that could be automated. SRAAS. ;-)

Now, there remains a place for managers, because stack ranking is a "guideline" and there is always some flexibility. So it's each manager's job to negotiate the budget of rankings for their team. This is why I've commented before that a vital factor is having a boss who is liked by others, and who has the leadership ability to stand up for his or her team.

> several studies performed in the last years indicate that the bell-curve ranking system has a number of flaws.

Related studies have also recently confirmed that water is wet, the Pope is Catholic, and what the fuck is wrong with you people.

Ironically, Yahoo is still hiring. A friend of mine, a recent grad was offered $135k base. That's on par with GOOG/FB and he's no stellar candidate either. Looks like they could've rehired them into different areas without laying them off.

Apart from all of the questions that arise from applying a single measure of "performance" to individual contributors (and not managers) and assuming that this index is distributed in a bell curve in small teams, stack ranking has an even bigger failing. It assumes that the success of a company is due to management carefully shaping the situation. I'm going to guess that really successful companies are successful because employees are empowered to do what they love, and management largely sees its role as playing enabling and protecting functions rather than a shaping function.

Mid- and upper-management are liable to imagine that they have a big hand a company's doing well, but my bet is that they have a much larger hand in a company's doing poorly. The best managers are often ones that step back.

Stack ranking sucks if the 'bands' are enforced on a small team level. Sure, your organization may well have 10% of people that noticeably underperform and need to be identified and fired; but yahoo-style ranking doesn't implement that.

Think of it from pure statistics viewpoint - if you put in a bag 10 red balls and 90 green balls; and then grab handfuls of them to form "teams" - you'll get a bunch of teams with no underperformers and most likely a team where most or all of them are underperformers. Put the same 'level' quota for each team - and you'll get exactly what you deserve.

The reason that I hate stack ranking is that I have to keep people around that I would rank poorly rather than simply letting them go because I don't want better people to be punished/limited by it.

This may make sense for a short time at a place like Yahoo! If Marissa wants to raise the average for Yahoo employees, then the first step is to raise hiring standards and cut dead weight. The danger is that stack ranking drives away high performers who are allergic to BS, so it should only be practiced for a year or two.