No Ratings, What Next?

Does your employer use a form of Ranking and Rating or Stacked Ranking? If you don’t know those terms – it is a process for evaluating performance of employees that has using the a curve to meet distribution when compensating employees. Take a moment to think,  “what are your thoughts on that system?” Good or bad? Like it or hate it? There is no right answer, just your opinion on your experiences within your own performance and compensation systems.

Yesterday, Microsoft employees learned that their old Stacked Ranking is going away. Just another large corporation that has decided to change. Many employees and former employees felt the system was a detriment to their careers and morale of the company. Below are the key points in the email that was sent out to all employees.

  • 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.

Was it time to change the system? Sure.  Everything over the years needs to change, be modified or tweaked for good reasons. Forced distribution is a very difficult task for a manager when his team is required to work together on everything. Should the performance management system get the most out of the employees rather than set up game playing? You bet! I worked for many years in a R&R system. I was very successful. Not always was the system perfect.  Is it time to do away with ratings? For me, I draw the line there. I guess I am old school. I don’t believe that we should give a trophy for participation. I believe that you must earn what you get; nothing should be just given or entitled. I believe that we must be accountable for our actions (or inaction). How do you know you are doing well? We all went to school, we received a grade that reflected our performance. Was it always spot on? Probably not, but close. I guess we will soon see schools drop grades in classrooms.

We should not let the political correctness or kinder/gentler approach become our standards moving forward. We need to be able to reward those employees that do outstanding work. If not by the pay, at least tell them in a rating. For those employees that are not performing, we can not soften the message to a point where it does not matter. Tell it is, no sugar coating. The ratings system should stay!

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  • Al Putman

    I understand and agree with elimination of the predetermined curve but I’m surprised that they abolished ratings.

  • Al, thanks for the comment. That was my first impression when I read the article as well. The forced distribution is a tricky item that normally is not for the better of teamwork and collaboration. Ratings, to me, are a necessary item.