Microsoft has recently announced that its human resources department is getting rid of its “stack ranking” method of reviewing employees. This system was very unpopular amongst its employees and management.
The “stack ranking” system – also known as a “vitality curve” or “rank and yank” – classifies employees based on a 20-70-10 system: the top 20% of workers are considered extremely valuable to the company, 70% receive adequate ratings and 10% are considered as underperforming and should be fired.
This program was made popular by General Electric in the 1980s. Other companies such as Motorola, IBM and Ford used similar methods to rate their employees. Most recently, newly installed Yahoo CEO Marissa Meyer installed the stack ranking system, resulting in the firing of 600 employees.
Microsoft employees complained this method forced employees to turn against one another for the sake of keeping their jobs or moving up in the ranks. Managers hated it because it forced them to rate a certain percentage of workers as underperforming, regardless of their job performance.