Microsoft Abolishes Stack Ranking Employee Evaluation Process

Many Microsoft employees expressed their happiness about the e-mail they got from Lisa Brummel, head of HR at Microsoft today. The mail states that Microsoft is ending the highly criticized stack ranking system among employees. Lisa mentioned in her mail that “no more curve,” , and there “will no longer be a pre-determined targeted distribution.”

In the management system known as “stack ranking”, every team must rate a certain percentage of employees as top performers, good performers, average and poor. It was reported that this system lead to lots of unhappy employees and created a bad environment among the team.

This should surprise everyone because companies like Amazon, Facebook and Yahoo has recently started their own versions of stack ranking for employees and Microsoft is ending it completely. There is no information on the upcoming review system at Microsoft.

Lisa’s email to her employees,

To Global Employees,

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.

This is a fundamentally new approach to performance and development designed to promote new levels of teamwork and agility for breakthrough business impact. We have taken feedback from thousands of employees over the past few years, we have reviewed numerous external programs and practices, and have sought to determine the best way to make sure our feedback mechanisms support our company goals and objectives. This change is an important step in continuing to create the best possible environment for our world-class talent to take on the toughest challenges and do world changing work.

To learn more about the new approach to performance and development, please join me for a Town Hall today at 2:00pm PT, either in person in building 92 or via webcast (see details below).

Here are the key elements:

• More emphasis on teamwork and collaboration. We’re getting more specific about how we think about successful performance and are focusing on three elements – not just the work you do on your own, but also how you leverage input and ideas from others, and what you contribute to others’ success – and how they add up to greater business impact.

• More emphasis on employee growth and development. Through a process called “Connects” we are optimizing for more timely feedback and meaningful discussions to help employees learn in the moment, grow and drive great results. These will be timed based on the rhythm of each part of our business, introducing more flexibility in how and when we discuss performance and development rather than following one timeline for the whole company. Our business cycles have accelerated and our teams operate on different schedules, and the new approach will accommodate that.

• No more curve. We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders 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.

• 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.

We will continue to align our rewards to the fiscal year, so there will be no change in timing for your rewards conversation with your manager, or when rewards are paid. And we will continue to ensure that our employees who make the most impact to the business will receive truly great compensation.

Just like any other company with a defined budget for compensation, we will continue to need to make decisions about how to allocate annual rewards. Our new approach will make it easier for managers and leaders to allocate rewards in a manner that reflects the unique contributions of their employees and teams.

I look forward to sharing more detail with you at the Town Hall, and to bringing the new approach to life with leaders across the company. We will transition starting today, and you will hear from your leadership in the coming days about next steps for how the transition will look in your business. We are also briefing managers and will continue to provide them with resources to answer questions and support you as we transition to this approach.

I’m excited about this new approach that’s supported by the Senior Leadership Team and my HR Leadership Team, and I hope you are too. Coming together in this way will reaffirm Microsoft as one of the greatest places to work in the world.

There is nothing we cannot accomplish when we work together as One Microsoft.

Lisa 

About the author  ⁄ pradeep

Pradeep, a Computer Science & Engineering graduate.

  • SategB

    This was the quincentennial reference to reflect how poor of a manager Ballmer was as CEO. It was a caustic policy that created a terrible work enviorment, retatrded innovation and risk taking, encourage politics over productivity and likely hurt the long term health of the company.

    Took way too long for its removal.

    • Sid

      Better late than never

    • LexicoRed

      You are correct it was a indefensible system that really took its toll on many good employees.

      It was a favorite of Ballmer. Maybe it was his own system that did him in! LOL

  • Guest

    Where is the source of this story? You guys are content theifs

    • counterblow

      uh schmuck, anyone inside MS could have sent him that email.

  • Guest

    Problem is it is going to take years to clean up this mess. Those who survived and thrived in the rank-system was the ones that was best at back stabbing, ass kissing and self-promotion.

    To have a cooperative environment you need TRUST and they water has been and will be polluted for a long time. Everyone know who the assholes are, it not they are going forget that overnight.

    Yes better late then never but it is going to be years before it is good.

  • BeenThereDoneThat

    I don’t know SategB personally, LexicoRed, or the Guest commentator . . . but after 5 years at Microsoft I can say they couldn’t be more right. As management administrations come and go, each administration protected those that supported their viewpoints or those they could manipulate sans any objective measure on performance. One would think revenue attainment would be objective enough but I know people in sales who blew out their sales numbers and still got sub-standard ratings and eventually left either because they saw the writing on the wall or were asked to leave. I also saw Managers make up crap in people’s reviews based on very poor data simply to comply with the program. These employees careers’ at Microsoft were hurt for life by such managers’ actions. It was commonly known that an employee that received bad review from a manager with a skewed agenda had no recourse. They could write whatever the needed to justify their rating even it was false and that going to HR to was a dead end street that could hurt one’s position even more. Microsoft lost some of their best performers through this system. The Vanity Fair article was spot on. All is very unfortunate because despite this horrifically destructive system, there are many good people at Microsoft and overall it is very good company with tremendous possible upside.

    • Guest

      Thanks for your insight. I have worked in similar environments and it breads a really ugly culture where the hard working good ones suffer the most.

      I wish you well in the future.

  • Pedro

    Owww FUCK MEEE I can’t fucking believe that, one of the MAJOR ugly cornerstones of MS defined by idiot Ballmer has been overturned??!! AT LAST??!! REALLY??!!! OWWW AWWW FUUCCKK MEEE… I can’t fucking believe this! The hell just froze over, guys.

    What’s next? MS beating Apple or Google? Yeah, don’t hold your breath for that. Not. Gonna. Happen.

    But still, this is the first major GOOD news I heard about MS in like a decade. I always thought that dumb idiot Ballmer ruined company and its demise is just a matter of time, Apple and Google are here to bury the corpse that already started to smell and decompose like still born Windows RT (hahaha LOL hahahaa… errmm excuse me for this digression, couldn’t hold myself hahaha LOOL!) but look at that shit! They just killed the major thing that ALWAYS defined their lameness and clumsiness.

    Okay folks, I officially declare from now on that MS DOES HAVE a chance for survival. They will fail hard for the next three years, ’cause no one will buy their dead RT shit, but still… they now have chance to kick back, after the remnants of the stack ranking system are abolished completely by 2016 or so.

    Jee, I’m so happy now! MS can maybe actually START COMPETING properly with Apple and Google in like 3 years form now. Folks, this is THE BEST news of the yearm THE. BEST. NEWS. PERIOD.

    You just don’t know what it means but I have a few buddies that used to work for MS and left because of dumb idiot Ballmer and his stack ranking system.

    I AM SO FUCKING HAPPY THE BOARD KICKED BALLMER OUT.

    You just can not imagine how happy I am now. You can not. Do not. even. try. haha :P you’ll fail just like RT LOL hahaha