Microsoft abandons employee-ranking system

The system forced managers to give a set proportion of employees a poor review, regardless of their qualities

Microsoft is abandoning a ranking system that has been blamed for hampering innovation and pitting employees against one another.

Employees learned of the move in an email from Lisa Brummel, Microsoft's executive vice president of human resources, on Tuesday.

The system, known as "stack ranking," has become emblematic of much that is wrong with Microsoft's corporate culture.

Employees have called it the most destructive process inside the company, blaming it for crippling Microsoft's ability to innovate, according to a Vanity Fair article, "Microsoft's Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant," published in June last year.

Stack ranking forced managers to give a predetermined proportion of employees in a team a top, fair or bad annual review, even when all team members did an excellent job.

This led to employees competing with each other instead of competing with other companies, according to one developer cited by Vanity Fair.

Now, though, Microsoft has decided to stop the ranking system, Brummel told employees via email on Tuesday. The email was shared with IDG News Service by Microsoft's German corporate communications department on Wednesday.

"I am pleased to announce that we are changing our performance review program 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," she wrote.

Stopping the rating system was one of the changes made: "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," Brummel wrote.

Microsoft will also stop its pre-determined targeted distribution rewards program, she wrote, adding that managers 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. This will make it easier for managers to allocate rewards, she said.

There will also be more emphasis on teamwork and collaboration. Microsoft will be more specific about what is deemed a special performance and will not only focus on the work an employee does, but will also evaluate how the employee uses ideas from others and what they contribute to others' success, she said.

Furthermore, there will also be more focus on employee growth and development. Through a process called "Connects" there will be more timely feedback to help employees learn, grow and drive results, she wrote.

The changes were devised after obtaining feedback from thousands of employees over the past few years, and following a review of numerous external programs and practices, she wrote. The transition to the new system started on Tuesday, she said.

Microsoft is currently undergoing a vast restructuring that is aimed to help the company innovate faster and operate in a more coherent manner. The restructuring should focus the company on a single strategy, said departing CEO Steve Ballmer when he announced the his plan in July.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuespersonnelMicrosoft

Struggling for Christmas presents this year? Check out our Christmas Gift Guide for some top tech suggestions and more.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Loek Essers

IDG News Service

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Shopping.com

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?