In light of Microsoft’s announcement earlier this week, I’m struck on how big companies have approached employee performance. Perhaps this latest instance marks a series of industry leaders poised to replace inherently adversarial HR systems like stack ranking with a more collaborative model.
What is Stack Ranking?
Stack ranking is a way for executives to categorize employees from best to worst. Theoretically it’s meant to identify high performers with potential for promotion. A year ago Forbes featured an article, “The Case for Stack Ranking of Employees.” Veteran CEO, Robert Sher, shared his point of view that stack ranking has its place. He wrote:
“I most often see the exact opposite problem…Employees (including management) aren’t evaluated with sufficient rigor, and low performers are tolerated. These low performers destroy the performance environment by encouraging average performers to slack off. The high performers either leave — they prefer working with other high performers — or become arrogant and hard to manage.”
Over the years I’ve consistently heard that no one enjoys the stack ranking process — executive team, managers, and employees. It was certainly a challenge for me when I had to stack rank my own employees. And, I’m not 100% convinced the system rewarded star performers with promotions and bonuses or motivated so-so employees to up their game at work. No matter how good I thought I was at delivering the ranking message.
Microsoft Replaces Performance Reviews with Connect Meetings
Rather than annual performance evaluations, employees will have “Connect Meetings” with their bosses. In the email announcement sent by Lisa Brummel, head of human resources at Microsoft, the reasoning was 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.”
Certainly, a stack ranking system can create an environment where employees are competitors rather than collaborators. It harkens back to our days at school where we were graded on a curve, and only a few can land at the top of the class.
A Managerial Shift in Styles
I’ve noticed that my typical coaching client is extraordinarily busy. There’s no shortage of meetings, project deliverables, and management duties to perform. If “connect meetings” replace performance evaluations, I think managers with these skills will shine:
- View their 1:1 meetings with direct reports as sacred
- Communicate their leadership style and values
- Able to genuinely connect to an employee as a person, learning what motivates them to deliver exceptional performance
A Shift In Employee Engagement
In the stack ranking model, managers who were able to project confidence when presenting their recommendations often won out in the process. The quiet ones, those not as comfortable speaking up, didn’t necessarily get what they wanted (for themselves or for their teams).
Now the onus is on managers to connect with employees more frequently and directly. I wonder if the foundation is being built where exceptional work can thrive.
I also wonder how the Millennial generation is reshaping HR. They are the largest generation since the Baby Boomers; their entry into the workplace marks a dramatic demographic shift.
If you are managing a Millennial, I recommend reading Pricewaterhouse Coopers’ study. Here are a few statistics I found surprising:
- 59% deliberately sought employers whose corporate responsibility behavior reflects their own values
- 70% value flexible working hours
- 52% indicated that opportunities for career progression are the most important factor
It’s fascinating how the workplace is evolving. Time will tell if Microsoft’s shift will actually improve innovation and deliver value to its customers.
Are you ready to embrace deeper collaboration with your employees?