One of the clumsiest management tools deployed by modern executives is stack ranking, the practice of putting staff members on a scale where the bottom 20% miss out on bonuses and, in bad times, are the first to be fired.
The process has terrible effects upon the morale of workplaces as it rewards political manoeuvring over effective performance; the worker who focuses on their task and the business tends to be overlooked compared to those who curry favour with the boss.
Another debilitating effect is it destroys teams as it has the perverse effect of discouraging people joining teams with high flying colleagues as it increases one’s chances of receiving a poor rating.
Stack ranking has previously damaged Microsoft and HP and now it appears Marissa Mayer has made the same mistake at Yahoo!.
That Mayer has made the same mistakes at Yahoo! is a disappointment; there were so many high hopes for her in reinvigorating the troubled company. Indeed carrying out the stack ranking process every quarter seems particularly debilitating and management intensive, it’s hard to think of a more effective way of destroying morale and distracting management.
In some situations Stack Ranking can be effective but the way companies like Yahoo!, HP and Microsoft have implemented the method, it’s proven to be the wrong tool for the job of managing high skilled workforces.
When implementing clumsy management tools like stack ranking, it’s worthwhile considering whether it’s the right tool for the job.
