Microsoft has reportedly made a significant change to its internal operations that won’t affect customers, but will affect employees. Microsoft has been using a controversial system for ranking its employees to encourage competition among workers. Microsoft used a stack-ranking system that it has now terminated.
The ending of the employee ranking system is said to be an effort by Steve Ballmer to create a collaborative environment within Microsoft as he heads off into retirement. The stack ranking system process had Microsoft’s business unit management team reviewing the performance of all employees and ranking workers as top performers, average, or poorly performing.
The controversy in the system came because some of the employees in a group needed to be given poor reviews to go along with the ranking method. Some have seen this stack ranking process as the most destructive process in use at Microsoft. Word that the stack ranking system is being terminated came in the form of an internal memo leaked from inside Microsoft penned by Microsoft HR chief Lisa Brummel.
Brummel wrote in the memo:
This is a fundamentally new approach to performance and development designed to promote new levels of teamwork and agility for breakthrough business impact.
Managers within Microsoft will now be able to allocate rewards to teams and individuals as they see fit rather than having to work within the stack ranking process. Brummel said that with “no more curve” the “generous” rewards program Microsoft has in place can be flexibly allocated by managers as long as they stay within the compensation budget. Brummel also notes that she will share more detail at Microsoft’s Town Hall meeting and the transition away from employee ranking is beginning starting today.