Microsoft abandons employee-ranking system

The system forced managers to give a set proportion of employees a poor review, regardless of their qualities

By , IDG News Service |  IT Management

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Image credit: flickr/Willi Heidelbach

Microsoft is abandoning a ranking system that has been blamed for hampering innovation and pitting employees against one another.

Employees learned of the move in an email from Lisa Brummel, Microsoft's executive vice president of human resources, on Tuesday.

The system, known as "stack ranking," has become emblematic of much that is wrong with Microsoft's corporate culture.

Employees have called it the most destructive process inside the company, blaming it for crippling Microsoft's ability to innovate, according to a Vanity Fair article, "Microsoft's Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant," published in June last year.

Stack ranking forced managers to give a predetermined proportion of employees in a team a top, fair or bad annual review, even when all team members did an excellent job.

This led to employees competing with each other instead of competing with other companies, according to one developer cited by Vanity Fair.

Now, though, Microsoft has decided to stop the ranking system, Brummel told employees via email on Tuesday. The email was shared with IDG News Service by Microsoft's German corporate communications department on Wednesday.

"I am pleased to announce that we are changing our performance review program to better align with the goals of our One Microsoft strategy. The changes we are making are important and necessary as we work to deliver innovation and value to customers through more connected engagement across the company," she wrote.

Stopping the rating system was one of the changes made: "No more ratings. This will let us focus on what matters -- having a deeper understanding of the impact we've made and our opportunities to grow and improve," Brummel wrote.

Microsoft will also stop its pre-determined targeted distribution rewards program, she wrote, adding that managers will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget. This will make it easier for managers to allocate rewards, she said.

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