Microsoft Corp. is abandoning major elements of its controversial “stack ranking” employee-review and compensation system, the latest blow against a once-popular management technique, the Wall Street Journal is reporting.
According to the report, the software giant said Tuesday it “is dumping the numerical rankings in favor of more frequent and qualitative employee evaluations. The change took effect immediately.”
HRE‘s Senior Editor Andrew R. McIlvaine recently wrote about the contentious topic of forced rankings in a news analysis piece titled The Merits of ‘Rank and Yank’.
Meanwhile, Bloomberg Businessweek is reporting Yahoo! is going in the opposite direction and embracing the idea of ranking employees on a bell curve.
Marissa Mayer’s decision to ring the bell curve at Yahoo! puts them in the minority when it comes to making changes in the performance-management process, according to a new survey from the Institute for Corporate Productivity:
Says i4cp’s Erik Samdahl:
Our research has previously shown that high-performance organizations have been abandoning forced rankings (or at least say they are – are they just rebranding?) at a much faster clip than lower performing orgs, based on data from 2009 and 2011. And yet, few companies are planning significant changes, even when few companies report they are effective at it.
So, here are two high-performing companies making big, about-face changes in their PM processes. While Microsoft’s ditching of forced ranking clearly shows what the company thinks of it, only time will tell whether Mayer’s “significant” move will pay off at Yahoo!.