3 Ways Stacked Ranking in Performance Management Screws Your Company…

Fire the bottom 10%.  Up or out.  You don't have to go home, but you can't stay here.

Welcome to the world of Stacked Ranking in performance management, where employees are forced into buckets, including a "these people suck" bucket, with the next step sometimes firing those folks as the last act in the morality play of stacked ranking.

Your biggest problem in performance management is rating inflation, where almost everyone is an "A" player.  That means a lot of companies try to give guidance to managers that no more than 20% of employees should receive the highest rating, etc.  Giving that type of guidance isn't stacked ranking.  It's guidance.

Stacked ranking forces people into the bottom rating.  If you go that way, there are some poisonous results that most people don't think about even if you don't fire the bottom dwellers.  Examples of the venom:

1. "A" Players don't want to work with other A players on the same team.  Why would they?  Their comp is based on them being an A player.  Better to work with some worker bees and get all the sunshine.

2. Teammates will try (subconsciously or not) to undermine the hiring of great talent.  It's a threat based on #1 above.  "I'm not sure about hiring Rick (A player recruit), he seemed negative about his last manager..." #ugh

3. Employees don't want to work for managers who push them.  Pushing me means holding me accountable to get better over time.  That also means lower ratings on average until I get there.  That's money, son.  Why would I want that?  Give me the soft, doughy manager and let me get the paper.

Stacked ranking sounds great, but it's really hard to do well without suffering the consequences above.  Better to give general guidance on distributions and embarrass managers with rating inflation out of their sell-out behavior than to force a system that creates the aforementioned poison.

Save this email and give it to the next exec who wants to use stacked ranking.  

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