Microsoft's Downfall and "Stack Ranking" Employees

Submitted by Jochen Adler
in
Manager Tools Trinity

Hello everyone,

I saw this article today and found it very interesting: http://m.vanityfair.com/online/daily/2012/07/microsoft-downfall-emails-steve-ballmer

Do you think it's credible, or is someone just fueling the PR engine for an upcoming book?

What resonated with me most was the criticism of "stack ranking" employees at Microsoft (forcing managers to "declare a certain percentage of employees as top performers, good performers, average, and poor"). My employer also does that, and I believe it's the most dysfunctional performance management practice: If you, as a manger, get to choose ten employees for a new organization, and you pick the smartest ten, you'll be punished: someone has to get the poor rating, he'll know what's going on, he'll have alternatives (if they're actually smart). They will leave and you lose. The system effectively sets an incentive to hire sub-standard people.

Or doesn't it? Am I missing something? What do others think?

Best
Jochen

Submitted by John Hack on Thursday July 5th, 2012 8:52 pm

You might find this previous discussion of the topic interesting (including Mark's perspective):  http://www.manager-tools.com/forums-1360 
Microsoft's current situation ("downfall" is too strong a word for a company still profitable with great cash flow!) is perhaps more strategic than operational.  They have some very strong businesses (Xbox, Office. Windows), some good position in emerging markets (Azure, Live) and some struggles (mobile devices).  
I seems unlikely that this situation can be explained by an HR ranking practice. 
John Hack