Twice a year, in a conference room at Microsoft, the blinds came down and the doors closed. As many as 30 managers from one group put a grid up on the wall and broke out the Post-it notes. Each note carried the name of someone who worked for them. One by one, the managers stuck their people into the boxes.
The numbers rarely worked on the first round, because the boxes had quotas. Every unit had to declare a set share of its people top performers, then good, average, below average and poor. So the haggling began, and the notes moved around, sometimes for days. “I myself have had to give rankings to people that they didn’t deserve because of this forced curve,” one manager told Kurt Eichenwald, who wrote about Microsoft’s decade under chief executive Steve Ballmer for Vanity Fair in August 2012.
Inside the company it was called stack ranking. Systems like it had spread after Jack Welch brought one to General Electric, and the idea, as Bloomberg later put it, was to reward the excellent and weed out the weak. At Microsoft, the top of the curve got bonuses and promotions. The bottom usually got no cash, or was shown the door. And the shape came first. On a team of ten, a former developer said, you knew on day one that two people would get a great review, seven a mediocre one and one a terrible one, “no matter how good everyone was.”
Eichenwald spelled out what that means. Put Steve Jobs, Mark Zuckerberg, Larry Page, Larry Ellison and Jeff Bezos in one unit, and under one version of the system, two of them would have to be rated below average and one would be called disastrous.
Inside the curve, the excellent did not always behave as planned. Meeting every one of your goals did not guarantee a high ranking, since a colleague might beat theirs by more. So, Eichenwald wrote, people tried to do a good job and also worked hard to make sure their colleagues did not. Executives told Eichenwald that many of the company’s stars avoided teams full of other strong developers, for fear of what it would do to their ranking.
“One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the rankings,” one engineer said.
Because your fate was settled in that room, you also had to impress the managers of other teams. One former engineer said that when he had a question for another team, he went first to the developer’s manager, not the developer, so the manager would know what he was working on.
Every current and former employee Eichenwald interviewed, he wrote, named stack ranking as the most destructive process inside Microsoft. Executives said the company’s own staff surveys, taken every six months, kept saying the same thing: groups that were supposed to be working together weren’t. The company declined to comment for his article.
On November 12, 2013, Microsoft’s head of human resources, Lisa Brummel, sent a memo to the company’s 99,000 staff. Two of its lines were three words each: “No more curve.”“No more ratings.” Managers would now hand out rewards as they saw fit, within their budgets.
When Brummel announced it to managers that morning, they clapped. By the end of the presentation, they gave a standing ovation.