Rank or Yank: Problem for one but Solution for the other!

This week Stack Ranking system shot up to the top of the news, when two large tech companies, Yahoo and Microsoft, took opposite stands, on this (controversial) employee performance system. Stack Ranking is an HR practice that is resorted to, for putting employees into pre-defined buckets to identify the “C” level workers.

GE Famed Forced Ranking System

Microsoft, that has taken some heat, and has been flayed in the media for following this practice, announced that it is moving away from this form of force fitting. Yahoo, on the other hand, decided to adopt this system and walked into HR Crosshairs.

These developments added fuel to the fire, reigniting the debate once again. The question being asked is that whether this system, introduced by Jack Welch, back in 1980 at GE, is still useful in today’s workforce environment. Remember that the workforce in US has moved steadily away from manufacturing. Today it is turning into predominantly knowledge based force. GE, since then, has abandoned this system of performance evaluation.

Are tech managers up to the task?

There is, of course, plenty of ammunition on both sides to go on. Some HR advocates take the view that the forced stacking system is sound, but is not being implemented properly. Others believe that embracing the system is symptomatic of incompetency in the middle management, in that the managers are unable to coach “under-performers.” This highlights the point that often the goals are not set well, or there is a strong element of subjectivity in evaluation. It is not unheard of that employees try to game the system where "anyone's loss is your gain." 

However, the proponents of this system concede that this should be used only for a short time.

In tech companies this problem becomes exacerbated since SMEs often rise to the position of managers. More often than not, they have no training or skills in talent management.

One of the issues with the forced stack ranking is that it tends to fit the employees on a standard “bell curve” – with a leading edge of top performers, most in the average “meets the expectation” category, and the trailing edge of under-performers, who would be on the chopping block.

The “bell curve” is a representation of a “Normal Distribution” or “Gaussian Distribution” in statistics. Like many things in life we tend to fit most “occurrences” into a “bell curve.”

Does Talent Follow the Bell Curve?

There is some belief that things in nature follow the Pareto Principle, or its more popular moniker- the 80/20 Rule. Scientists have shown that this behavior has been pervasive and, has been observed in both natural and man-made artifacts. This distribution has been found to exist in place as diverse as in social networks, biology, urban planning, website visits, political landscape and other sociological phenomena.

The 80/20 Rule: Note the steep fall

This distribution has been recognized to exist in workplace also, where we all agree that 80% of employees in any team deliver only 20% of the work.

A typical Pareto curve shows a tall head that drops quickly and sports a long tail. It has been found that the long tail of a Pareto Curve persists far longer than a trailing edge of a “bell curve.”

A Company of Super Performers

This does not mean that if a company fires 80% of its work force and hires instead, few super-workers, it will turn into a hyper-performing company.  We are yet to see the rise of such a super company that has only the highest performing employees. 

Maybe it is time that the HR Gurus need to consider the implications of Pareto Principle in workplace, and suggest an alternative approach to the forced staking into a bell curve. Note that a stacking system focuses on individuals over the team. The emphasis is growing on work collaboration where output is often highly interdependent. 

The 21^st Century workforce that is rapidly transforming into knowledge workers engaged in a flatter system will demand such a change. We see than in Generation Y whose expectation at the work place is very different from the one just two decades ago.

Organizations, that are agile at the cutting edge, have a different problem to solve. In their case innovation drives the growth.  This often requires flashes of genius with a team to do the quick operational heavy lifting. More often than not, innovation is not a big bolt from the blue, but a series of little flashes that need to be tested quickly and discarded if need be.  

In such organizations morale is the key. Talent usually does not indulge in game playing to beat the staking principle and, if the atmosphere gets murky they are the first ones to leave.

Will Bing soon be looking for a new parent?

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Businessweek reported that the potential Microsoft CEO candidate, Stephan Elop,

“…would consider ending Microsoft’s costly effort to take on Google with its Bing search engine, and would also consider selling healthy businesses such as the Xbox game console if he determined they weren’t critical to the company’s strategy,..”

 

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Maybe just a Test Balloon?

At this point this could just be second guessing, based on the opinions of some people who are said to be familiar with Elop's thinking. Search experts, however, were quick to analyze such a move. +Greg Sterling  made some great arguments here.

One obvious speculation was to whom Microsoft could sell Bing to!

+Danny Sullivan, of Search Engine Land held the view that Bing is too strategic for Microsoft to “just walk away” from the search engine. Bing is deeply integrated with the Windows Phone and other Microsoft products.  In his view it would be too disruptive for Microsoft to disengage from Bing. 

Yahoo and Apple are the two names being bandied about. 

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Possibility of search engines overseas, like Alibaba, Baidu and Yandex  acquiring Bing is being mentioned. This does make some sense, since the next (and potentially explosive) round of growth in Internet will come from Asia (and Africa). Along with more people accessing Internet, demand will rise for search engines that are better customized to the regional needs (my earlier post).

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But Competition also spawns Innovation

Competition is another reason why Bing needs to exist. Healthy rivalry does not let players sit on their hunches. It spurs the urge to innovate and to do better. Blackberry learned that lesson too late.  Microsoft’s Web Based Office 365 (and recently announced real-time collaboration), are two current examples.

 Note the differences between how Bing and Google describe Bing

 The problem that is generally associated with Bing, is that it continued, for far too long, into “me too” mode, trying to grow by doing the similar things as Google. It did not create much deeper differentiation.

Bing found it difficult to shake off those colors!

 Where search engines have not gone before

Search is one of the fundamental processes of discovery. But it is, by no means, need to be uni-dimensional.   

Facebook is proving this by building their Graph Search. By thinking differently, Bing could grow into other, less explored frontiers in searching, area that will be as natural as Googling something today.   

It is not that Bing lacks the brainpower to step into the unchartered waters. It is their managers that lacked the will (or vision) to venture forth.