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

http://www.infoq.com/news/2013/11/stack-ranking-microsoft-yahoo

by DanielRibeiro • 13 years ago

31 44 13 years ago

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.

altrego99• 13 years ago

This is one glaring example of corporate stupidity.

I couldn't ever overlook the gross misunderstanding of statistics here. The "bell curve" is an asymptotic distribution law, and even assuming that the distribution of performance is indeed normal, it is outright idiotic to fit the bell curve with as low as 10 people. The chance that no one out of 10 random people will be really at the lowest 5% of performance, is as high as 60%. The HR even uses an Excel sheet to even draw a normal distribution...

I have seen many good people's careers stopped in my farm (and it is a big farm), because of this "bell curve".

X4• 13 years ago

They should've hired a mathematician to at least analyse who should not be fired.

asdfologist6• 13 years ago

Where does it say it's applied to teams of 10 people? When MSFT had stack ranking, it had a minimum team size (though I'm not sure what it was).

bowlofpetunias2• 13 years ago

I yield to your superior knowledge of statistics (I have none), but that's not the point.

Layoffs are about speed, not accuracy. The faster they're done, the less damage they do. The only thing that matters besides the number of people to lay off is not losing your best people, which comes down to speed (the longer the mess lasts, the more likely your best people will leave) and being accurate enough to not accidentally lay off your best people.

Seems to me that stack racking, however awful it is ethically, emotionally and statistically, at least covers that well enough.

crassus• 13 years ago

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.

od2m2• 13 years ago

Yep, the truly brilliant folks are very bad at social skills / marketing themselves. They're usually introverts so although they're making critical contributions THEY'RE NOT RUNNING AROUND TELLING EVERYONE HOW GREAT THEY ARE.

Generally if someone is telling me how great they are, I assume they're not.

product50• 13 years ago

Usually the truly brilliant are good at both - social skills and their work.

Also, if an employee is really really good, they will not make the negative curve of the graph. It is normally the fringe players who are (unfairly) impacted.

jhspaybar• 13 years ago

Is there research to this stereotype of "smart people are introverts"? Especially in highly collaborative environments like software engineering. Being an introvert and an asshole seems completely opposite to asking for, receiving, and giving help. My experience tells me this is bad in the environment we work in...

enneff• 13 years ago

This is not true in my experience. Do you have any data to back this up? Seems like a bit of a poke in the eye to those of us that do a great job and have social skills.

seivan• 13 years ago

No one is or can remain a high performer forever. At some point in life you get different priorities. Kids, spouse, family in general and etc. I'll put up with some BS and dead weight instead of elitists.

Iftheshoefits• 13 years ago

I don't suppose you see the irony in your comment.

SamReidHughes• 13 years ago

If you're a CEO and your goal is mediocrity, that's a good plan.

curiousDog3• 13 years ago

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.

asdfologist6• 13 years ago

I don't see how that's ironic. It's logically consistent for a CEO to desire to layoff dead wood and simultaneously expand the company with strong hires.

a3n• 13 years ago

The same people who hired the dead wood are hiring the strong hires, so ...

bilbo0s• 13 years ago

"...It's logically consistent for a CEO to desire to layoff dead wood and simultaneously expand the company with strong hires..."

"...A friend of mine, a recent grad was offered $135k base... and he's no stellar candidate either..."

???

I've been reserving judgement... but the more I hear... the more I wonder what exactly the plan is at Yahoo.

pcurve• 13 years ago

undergrad? Wow...

PeterisP• 13 years ago

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.

ProblemFactory• 13 years ago

Teams are not formed randomly - competent people like working with other competent people, and underperformers find safety among other underperformers. Even an impersonal evaluation of entire teams as a whole would be more accurate than a 10% firing quota for every team.

camus2• 13 years ago

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.

laureny• 13 years ago

Your analysis is correct but you're coming to the wrong conclusions.

It's clear that going in, Marissa needed to fire a lot of Yahoo employees, she just needed to find a way to do that and she found two: 1) revoke remote privileges and 2) stack ranking.

Once she is satisfied that she has gotten rid of all the underperformers, she will most likely cancel these two policies.

And in the meantime, Yahoo is offering top dollars to hire new blood (ideally coming from Google).

ilyanep• 13 years ago

I don't see how firing underperformers and other dead weight is evidence of a lack of long-term strategy. To me that sounds like a good first step in a long-term solution of making Yahoo! once again a place that talented people work.

DanielBMarkham• 13 years ago

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.

asdfologist6• 13 years ago

Exactly. I notice this pattern of thinking quite often on HN: X has some flaw (according to shoddy armchair analysis and vague anecdotes), so X is terrible. If you want to argue that X is bad, you should at least discuss an alternative Y and make a convincing argument as to why Y is better than X. There are pros and cons to everything.

spamizbad• 13 years ago

Exactly. I notice this pattern of thinking quite often on HN: X has some flaw (according to shoddy armchair analysis and vague anecdotes), so X is terrible.

Harvard Business School has studied employee performance evaluations and has found them to be flawed: http://www.hbs.edu/faculty/Pages/item.aspx?num=44969

toast0• 13 years ago

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.

If the problem is the number of employees, why do they have 300 job openings posted?

analog31• 13 years ago

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.

allochthon• 13 years ago

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.

PhasmaFelis2• 13 years ago

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.

consultutah• 13 years ago

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.

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

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