Microsoft Corporation: Is Stack Ranking the Answer?

The type of case I would describe the “Microsoft Corporation: Is Stack Ranking the Answer?” would be a decision

due to ABF corporation considering implementing the stack ranking review process for their company. The

company (Human Resource) is currently unhappy with the current system in place within the company which

does not allow them to effectively rate employees performance, which in turn the company feels could be

preventing the company from reaching its fullest potential.

While reviewing the case it does appear that the ABF Corporation did think critically about changing its review process to the stack

ranking process. It does appear that the company really does need to think about if this specific review process is right for their

company and their company’s morale and culture. It does appear towards the end that carry Sheldon does realize there is several

things to take into consideration. It appears that the Microsoft Corporation management emotional intelligences was lacking as far

what the employees really needed to help make the company successful and that fact alone will help the ABF company to make an

informed decision about implanting the stank ranking system. The ABF Corporation does appear to be taking this decision seriously

 from an emotional intelligence standpoint as far as how it will affect the company's culture and their employees.

Cary Sheldon: Vice President of human resources at ABF Corporation.

• In the process of reviewing the employee appraisal submission for her firm.
• ABF has had years of rapid growth, but still underperforming relative to its peers.
• Relaxed performance appraisal system could be part of the problem.
• The current performance appraisal program isn’t getting the results we need.
• All employees end up being rated either 3.5, 4.0, 4.5 out of 5.  The rankings are too bunched for us to determine which ones are the superstars and which ones are the poorest performers - the bottom 10 - 15 percent - whom we need to weed out.
• Goal, to develop a performance management program that would enable ABF to attract, support and promote the best employees, weed out the laggards and inspire her engineers to develop new and innovative products.

• September 19, 2013, Sheldon began studying the data collected and compiled regarding Microsoft’s Stack Rating System.

Stack Ranking System:

• Performance reviews were given twice a year and were based on objectives that were specific, measurable, attainable, results-based and time-bound (SMART).
• Reviews focused on learning from mistakes and the culture (fueled by Bill Gates) was that feedback was blunt and to the point.
• Stack ranking was patterned after Jack Welch’s Vitality Curve at General Electric.

1975  Bill Gates and Paul Allen founded Microsoft in Redmond, Washington.

1980  Steve Ballmer joins Microsoft.

1986  Microsoft holds its first public offering of shares.

1999  Microsoft was the world's most valuable company, with a market capitalization of

           $619 billion.  The share price at it's peak was $60.

1999  The "dotcom" crash occurred.                                                                                                                                                            

2000  Bill Gates steps down as CEO and is replaced by Steve Ballmer:

2000  Steve Ballmer named CEO of Microsoft.

2005  Steve Ballmer initiated the Stack Ranking System.

• I think everybody wants to work in a high performance culture where we reward people who are doing fantastic work, and we help people who are having a hard time find something else to do.

2013  November 12, Microsoft announced it was abandoning the practice (MQIT 2013)

           of stack ranking.

Jack Welch: former CEO of General Electric.  

• This is not some mean system - this is the kindest form of management.  Low performers are given a chance to improve, and if they don’t in a year or so, you move them out.

• A Vitality Curve is a leadership construct whereby a workforce is graded in accordance with the individual productivity of its members. It is also known as forced ranking, forced distribution, rank and yank, and stack ranking (MQIT 2013).
•  Jack Welch’s vitality model has been described as a “20-70-10” system. The “top 20” percent of the workforce is most productive, and 70% (the “vital 70”) work adequately. The other 10% (“bottom 10”) are non-producers and should be fired. Rank-and-yank advocates credit Welch’s rank-and-yank system with a 28-fold increase in earnings (and a 5-fold increase in revenue) at GE between 1981 and 2001 (MQIT 2013).

David Auerback: a former Microsoft manager.

• The stack rank was harmful.
• Stack ranking is toxic for innovation and integrity and morale.

Works cited

Pojol, B. (2013, November 13). Vitality Curve (forced ranking, forced distribution, rank and yank, stack ranking). [Blog post].  Retrieved from https://mqit.wordpress.com/2013/11/13/vitality-curve-forced-ranking-forced-distribution-rank-and-yank-stack-ranking/