Let’s engage in a high-concept flight of fancy here. Imagine you have a time machine, and a mission to retrieve some of the greatest minds in science and technology and put them together in a room in order to solve a massive, potentially world-ending problem. So you zip back and forth through the years, retrieving Isaac Newton, Albert Einstein, Marie Curie—take your pick of the Best of the Best. With all that intellectual firepower, you quickly solve the problem and send your champions back to their respective time-periods.
Once they’re gone, your supervisor—the same one who gave you the time machine—asks you to rank how well those legends performed. There’s just one catch: you can’t rate them all as “excellent,” or even “good.” Some immortal genius will need to be stuck with a dreaded “poor” rating, even if his or her performance was exemplary.
That process is known as stack ranking. It’s widely attributed with helping create a negative atmosphere within companies that have chosen to embrace it as a management tool, such as Microsoft. And now Yahoo’s reportedly decided that a similar system presents the best way to create more efficient products and boost morale.
According to AllThingsD, which drew its information from numerous anonymous posts made on a Yahoo internal message-board, the company now relies on a quarterly system that ranks staff “with designations of ‘Occasionally Misses’ and ‘Misses,’ even if it is not the case, via what is essentially a modified bell curve.” Those with lower scores are fired, according to other, anonymous sources speaking to the newspaper.
Yahoo CEO Marissa Mayer has reportedly denied that the rankings were forced, but that hasn’t stopped employees from venting their ire in the company’s online forums. “It is 100 [percent] true that managers are told they need to put someone in occasionally misses to meet the distribution,” one wrote. “It is not a cop out, as you mention. We are told, very clearly, that we have to rank someone low.”
It’s odd for Yahoo to embrace draconian ranking systems at a time when many firms are abandoning similar practices. Microsoft, for example, once demanded that managers place their subordinates on a scale from “top” to “poor,” a practice that fueled some epic backstabbing within divisions. Last year, a Microsoft contractor with knowledge of the company’s internal review processes told Slashdot that Microsoft was actively working to fix that system; just this week, the company announced that stack ranking was well and truly dead (that’s certainly one way to fix it). General Electric, another big advocate of stack ranking, has also lightened the more heavy-handed elements of their system.
Bloomberg BusinessWeek thinks that ranking employees on a curve is a spectacularly bad idea (tip o’ the hat to ValleyWag for the link). “Companies performing well were less likely to be using forced ranking systems than those that weren’t,” read a Nov. 12 article. “Just over 5 percent of high-performing companies used a forced ranking system in 2011, down from almost 20 percent two years earlier.”
Mayer clearly feels the need to transform Yahoo into a lean, mean machine capable of competing against Google and other aggressive Silicon Valley competitors. But in her drive to craft a team of A players, she may have sown the seeds of internal dissent.