The Poisonous Employee-Ranking System That Helps Explain Microsoft’s Decline

There were many reasons for the decline of Microsoft under Steve Ballmer, including, as I wrote this morning, its lack of focus and its habit of chasing trends rather than creating them. But one that’s not obvious to outsiders was the company’s employee evaluation system, known as “stack ranking.” The system—and its poisonous effects on Microsoft’s corporate culture—was best explained in an outstanding Vanity Fair feature by Kurt Eichenwald last year...

So while Google was encouraging its employees to spend 20 percent of their time to work on ideas that excited them personally, Ballmer was inadvertently encouraging his to spend a good chunk of their time playing office politics. Why try to outrun the bear when you can just tie your co-workers' shoelaces?

Microsoft wasn’t the first company to adopt this sort of ranking system. It was actually popularized by Jack Welch at GE, where it was known as “rank and yank.” Welch defended the practice to the Wall Street Journal in a January 2012 article, saying, “This is not some mean system—this is the kindest form of management. [Low performers] are given a chance to improve, and if they don't in a year or so, you move them out. "

As the Journal and others have noted, what seemed to work for Welch—for a time, anyway—has produced some ugly results elsewhere. Even GE phased the system out following Welch’s departure.

Apple keeps inventing new horses.

That's a whole lot of horse crap!

Apple didn't invent anything in the last 10 years or more. Apple just took what was out there, and made it better. That's not inventing; that's basically, the same as reinventing the wheel.

Apple is still, basically, a one trick pony, with minor upgrades or tiny increments to their devices, in order to create a new sales cycle for the same basic things. There is one iPHone, with a tiny increment each year, and there is basically one iPad, and a tiny version of that same iPad. Apple does make Macs, but, those aren't even in the picture for what constitutes Apple.

Nice try, but your comments are the biggest load of crap on the planet.

I work in a company that does this. I think that *on the whole* talent is recognized. But there are exceptions as well. And there are probably many more cases where someone is ranked middle of the pack (not bottom 5%) when they should be higher, or someone who is ranked higher when they should be middle of the pack.

But I strongly agree that it creates a fearful, political atmosphere. People in this environment will tend to do the safe thing, not the innovative, courageous thing. And there’ll be a bit less of a tendency to help one’s peers.

Having said all of that - no system is perfect - at least none that I can see or even imagine.

The biggest thing is that if you’re at a company that’s “flying high” - say like Google - everything is going to come out smelling like roses. You’ll get the smartest people - they will get stock options that actually are worth something and you’ll get to develop new and innovative products.

If you’re working at a company in decline - nothing is going to seem like it works. People will leave, the ones that stay won’t be happy and the rich will get richer and the poor will get poorer.

“...that company — in my rear-view mirror — for the final time...”

I felt the same way. On my last day I was ‘checked out’ of the company, I could not say good bye to my work associates and was escorted to the parking lot. As I approached my car, I looked back and felt like a newly released prisoner just given a gray suit and $5 dolars spending money.

Sure- I've only been writing software for twenty years on multiple platforms, so I don't what I'm talking about.

As soon as a major manufacturer can get an alternative OS installed in bulk that supports viable consumer and business apps that doesn't cost $2000 a la apple MS is toast. Already any business using Windows servers on its back end is run by fools (having just seen a back end server on hosted network get infested with viruses).

I think everyone who works in IT owes MS a big debt because computer use would never have gone anywhere if everyone were stuck having to a $20k SG workstation. But that doesn't mean Windows isn't a POS.

Sure- I've only been writing software for twenty years on multiple platforms, so I don't what I'm talking about. Woah! Am I supposed to be impressed?!?

But, buddy, I've got you beat by at least twice your number of years of experience, at development and analysis and management in IT. But, neither your experience nor mine are material to the subject at hand.

As soon as a major manufacturer can get an alternative OS installed in bulk that supports viable consumer and business apps that doesn't cost $2000 a la apple MS is toast.

Not likely to happen.

Linux is "free" and there are major companies that have used Linux for their devices and services, and lately, Linux in the form of Android has tried its hand, and they're still not breaking into the consumer or business sectors with any kind of success. Then there is OSX and it's many variations, which many thought could be a major competitor to Windows, and it's only been able to garner not much better than around 5% of the market.

But, keep waiting and dreaming. What hasn't occurred in the last 30 years or so, could happen. But then, MS would have to make some real awful and major mistakes for that to happen.

That Windows that you call a POS, has been driving business, small/medium/large, for over a generation, and quite well, as witnessed by how not many opted to go with Linux of OSX or any other. That POS is still installed on over 2 billion computers around the world, even if they're not in use all the time. What other piece of software can make that claim. No, Android can't make that claim, because, it's still a fairly new player and the staying power of the OS is still in doubt.

Now, since your experience, nor mine, matter in the discussion, the only other thing that matters, is the general consumer and business users, who've decided that, your dislike for MS is not how things work when it comes to their IT/computer/software decisions. Already any business using Windows servers on its back end is run by fools (having just seen a back end server on hosted network get infested with viruses). I think everyone who works in IT owes MS a big debt because computer use would never have gone anywhere if everyone were stuck having to a $20k SG workstation. But that doesn't mean Windows isn't a POS.

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