First, I'm happy to see a manager concerned about this issue, but at the same time it's yet another tacit/implicit realization that there's something very wrong with the process.
How do I ensure fair performance ratings in the stack ranking system?
You can't. You should avoid/abandon the process if you have the ability to do so.
After reading some of the other responses, I ultimately think they're just attempts to "patch" a fundamentally broken process and should be abandoned. Even if you don't currently have a "slimy" culture, as others mentioned (which is an important point), that's only marginally relevant.
This is like asking "How can I make water stop being wet?". Wetness is a property of water just like unfairness is a property of the rank-and-yank system. Here're just a few reasons why I think this is the case.
- is based on false assumptions;
- expects predetermined results from the outset;
- punishes real teamwork;
- undermines trust;
- is subjective and arbitrary;
I'll elaborate on each point below.
1. It's Based on False Assumptions
Another way of asking the question is to use rock-paper-scissors: "In rock-papers-scissors, which option gives me the highest/average/lowest win rate?"
The assumption that there is a better option is flawed. Since they all beat each other, no one option can be "better" or "worse" than the alternatives. They're good for different things and you'd expect managers to understand this, at least if they're worth their salt...
When someone comes along with the built-in assumption that there must be a distinction, and attempts to force one systematically, that's where things go sour.
The process implicitly assumes that:
- employees, and only employees, are responsible for their performance;
- real value is proportional to task visibility;
- an employee's performance can be reduced to a number;
- constant fear of getting laid off is a good "motivator" for improvement;
- task context and complexity are the same for everyone;
- "poor" performers actually exist in a team/organization;
These are a few examples of the fundamentally flawed assumptions at the foundation of this rank-and-yank process.
Point #1: This completely ignores any sort of impact management has regarding an employee's ability to perform.
I've seen managers be very poor at creating and/or prioritizing "important" tasks, only to see the engineers who complete the requested tasks get labeled as "poor" performers in ratings as a result (e.g. their works lacks "value").
In reality, the tasks were not as "important" nor had the "value" impact the manager(s) imagined them to have, yet employees working on them paid the consequences of poor leadership. The book, Leadership Gold, basically has a section that boils down to the following: If you want to evaluate a leader, look at the state of their followers.
Point #2: The level of visibility in your work does not determine the value produced by your work.
I've seen employees that did important/necessary, but less visible, work get under-represented and thrown under the bus during ratings for the sake of those that do more "visible" work or get better representation from their managers. Some employees will get "setup for failure" simply on the basis of the tasks they are given.
Point #3: An employee's performance cannot be reduced to a number in an spreadsheet; certainly not objectively.
You cannot have any level of "fairness" without complete objectivity and transparency, yet this system is anything but transparent. In my experience, even if someone tries to define "SMART" goals as others suggested, they're often defined at a high-level by management, rarely have a real impact in your actual day-to-day tasks, and may not get updated for several (6 - 12) months. (As an example, I'd always have "goals" about customer interactions, even though there was no way for me to interact with customers. It was nonsense.)
If you're aware of the day-to-day tasks your employees need to do, then use that as input for any SMART goals you create. If they're working on things you don't consider important, then you must take responsibility for the lack of direction openly and explicitly, apologize to your employee(s), be absolutely clear with them about it and that it's not their fault (they did not create/prioritize the work, you did), change their direction to tasks you consider important, and not penalize them in any sort of evaluation for this. Paraphrasing Sun Tzu, when there's confusion in the army, it is the fault of the general.
Point #4: Punishment is not a motivator for anyone on anything.
Although research is consistent with this, the fact that this is true ought to be self-evident, IMHO. Even dog training is based on rewarding good behavior --not on punishing every mistake. Doing the latter will cause fear/distrust instead. This is especially the case when a company wants its employees to "innovate". Innovation requires trying out new things. Trying out new things means that there're going be failed attempts left and right. When people know there're negative consequences for failure, they won't even try because they can't trust that management "has their backs"; they don't have a safe environment. OTOH, management can then turn around and punish them for not "innovating" either. It can be a lose-lose situation, and it's up to you to prevent this from happening to your team.
Point #5: No 2 employees do the same kind of work, even if they're in the same team.
Some employees have a stronger desire to try out new things, such as new technologies/tools to solve problems, or work on problems that no one else has worked on before within the team. (I tend to be like this.) Obviously, that takes more time and effort than those who (perhaps more astutely) choose to remain within their comfort zones. It means that tasks are more complex/time-consuming because employees need to figure out how management's new toys work if they expect to integrate legacy systems to newer ones (This is from a software engineer's PoV.)
The fact that the context and complexity are different for everyone means that you're not really/truly comparing apples-to-apples, especially given that people are rated relatively to their peers. It's easy for a manager to see John Doe as "more valuable" than John Smith after seeing that JD completed 50 tasks but JS only completed 20. The fact that the 50 tasks required less effort than the other 20 larger and more complicated tasks tends to be ignored. Don't let this happen; it's unfair to your team.
Point #6: Trying to rank someone "fairly" by using a process that is, by definition, unfair is an oxymoron.
It's assumed from the outset that there are "poor" performers in the team, regardless of what reality is. It tries to force the reality square peg through an idealistic round hole. If you have some Team-A and some other Team-B, and management cancels the project Team-A was working on, guess which team is going to be seen as the "poor" performers due to no fault of their own? Well, Team-A of course! It's usually reasoned that, since Team-A never "delivered" anything, Team-A must, therefore, not be "productive". (An obvious non-sequitur fallacy.)
I've seen 30+ member strong teams get gutted down to barely 5 geographically distributed individuals over the course of several waves of layoffs in roughly 2 years precisely because of this. (Some months after ratings seems too coincidental to ignore.) In short, those at the bottom end up paying the "broken plates" of those at the top. If you seek fairness, you cannot allow this to happen. The only way to win in a rigged contest is to not play the game.
2. It Expects Pre-Determined Results from the Outset
This is a self-fulfilling prophesy. Top management will look at the bell curve distribution and observe that:
- 10% are above average
- 80% are average
- 10% are poor
Then they make sure their employee rating distribution fits distributions already observed. Then said statistical data is used to justify the team's rating distribution. In short, this is a textbook example of the fallacy of begging the question (i.e. circular reasoning).
As an example, you could create a team of 10 high-achieving individuals, and if you use the stacked ranking system, you've guaranteed that 1 of them will be rated "top performer", 8 will get an average/mediocre rating, and 1 will be rated poorly from the outset, before you've even begun any sort of evaluation.
I've read that Microsoft, Adobe, and even GE (the one who first popularized this rating system), among others, have all abandoned this rating process for the failure that it is. I don't know why other companies still insist on using it...
I've had peers really concerned/afraid of accepting promotions, refuse to transfer to a different team to try new things they're interested in to grow their careers, and so on precisely because they know it increases the odds of being rated as a "loser".
3. It Punishes Real Teamwork
The system encourages the opposite of teamwork.
A company that claims to "value" team-work while only rewarding/punishing individuals is rather inconsistent (read: hypocritical) at best, wouldn't you say?
The issue here is that, under a system that evaluates employees as individuals, there's no reason/incentive to help others in a team --at least from a purely logical/rational PoV. Even companies are careful to avoid cannibalizing their own products...
Can you imagine, if SONY and Microsoft were on the same "team", SONY diverting its own resources to help Microsoft build the XBOX faster and better while SONY itself tries to do the same with the PlayStation? Yeah... not gonna happen.
The reason is simple: Any time that John Doe spends helping John Smith complete his tasks is time that JD is not spending on his own tasks. Since tasks completed by JS will have JS's name on them, and since JD will be evaluated based on the completed tasks he himself had assigned, it's easy to realize that it's not in JD's best interests to help JS when JS gets stuck --even if it would actually help the team and the company as a whole.
As others have already noted, the Vanity Fair article, Microsoft's Lost Decade shows this is more than just some hypothetical scenario. It cost Microsoft the ability to produce a smart phone to complete with Apple early on, which was the outcome of a toxic culture produced by the underlying process. No one wanted to be rated as a "failure" and the only way to achieve that was by working to get the other team to be rated as the "failure" instead; they ended up sabotaging each other.
A tree is known by its fruit. A bad tree cannot produce good fruit just like a good tree cannot produce bad fruit. In short, you need only see the results of applying this rank-and-yank process to the workforce to realize how internally divisive and destructive it actually is.
Think of the Olympics: How can you make sure you win the gold medal? Well, by making sure no one else can, of course! If this were a game, it'd be a free-for-all. If this were a movie, it'd be Highlander, where "There can be only one!".
4. It Undermines Trust
The system is inherently very secretive and lacks transparency. I've never met anyone who was either able or willing to explain it. It also sends inconsistent messages to the workforce.
Yesterday's "top" performers are today's "average". Today's "average" are tomorrow's "poor" performers. Tomorrow's "poor" performers are in danger of getting laid off. Performance measurements don't really "measure" performance. They're basically thinly-veiled witch hunts with the objective of figuring out how to justify a "poor" rating on someone that's very unlikely to actually deserve it and who has been working just as hard as the guy/gal in the cubicle next to you. I've seen management openly, yet politically, admit that upper management has provided "guidance" and "set expectations" about how the process is to work (read: how they want results to look like).
Years ago, when I was a new-hire at a former employer (and before I knew better), I received very positive feedback during my first year, including from management. Then, during ratings, the very management that had been praising me throughout my 1st year later put a "below expectations" rating on me out of the blue. When pressed, my then-manager admitted that they had a "quota" (his word). In short, I was the de facto sacrificial lamb in the team to honor the supreme process, for no reason other than me being "the new guy".
Trying force pre-conceived agendas on reality is not fair to the workforce at any level and makes no sense at rational/logical level.
5. It's Subjective and Arbitrary
The system is based on subjective and arbitrary perceptions rather than objectively measurable criteria.
Is it even possible for a person to come up with a non-arbitrary set of criteria to measure another person? This is not just a hypothetical philosophical issue; it's at the very core of any system of measurement. It can be argued we can come close enough to something that most people would consider reasonable, at least on paper, but I think it breaks down in practice when people try to apply it.
As briefly noted, many people tend to do a lot of necessary behind-the-scenes work, a lot of which goes unnoticed, especially by those who often use it the most.
Consider the StackExchange staff. They keep this infrastructure up and running, but most people will just take that for granted. After all, it's "just another web site in a sea of millions of others sites, so it's expected to be up and running".
Yet that's precisely the point. It's like a special effects team in a high-budget movie. You can only tell the SFX team did an outstanding job when you don't notice that they actually did their job!
Yet, behind-the-scenes work, in several cases I've seen (particularly in test and tools teams) tends to go unrewarded and/or under-appreciated. If you want to try and be fair, you must make sure you take these details into account and represent them well. Unfortunately, it's often the case that managers above you, who are far removed from those in the "trenches", make the decisions and will just overrule your representation with their more authoritative, though not necessarily better-informed, opinions, which goes back to the previous points I made.
Conclusion and Final Thoughts
Ultimately, the rank-and-yank process promotes a dog-eat-dog environment when consistently followed to its logical dead-end. Most (not all) people choose to be illogical and don't do that because they want to be good team players, but the point is that the process itself does not encourage this altruistic behavior/attitude. If it's at all possible for you, try to use your influence to move away from the rank-and-yank system.
If you really want to be fair to your employees, you cannot play the game.
If you're stuck with the process, as you seem to be (at least for the time being), then at least consider the following:
- Refuse to force data into the pre-conceived expectation "buckets".
- Refuse to pit employees against one another; instead, represent the work they do and the value they create, regardless of whether you get along with the specific individuals.
- Realize that if you cannot quantify the value they create, based on your direction, then that's on you and not on them. Take full responsibility for this; we're all human; don't let them pay for your mistakes.
- Protect your team. Be clear and transparent with them, always.
- Reward attempts to innovate, even when they don't pan out.
- Hold yourself accountable for the team's overall motivation/morale, performance, etc.
Avoid playing office politics with your team. I've discovered it's often the case that, due to a fear of retaliation of some sort (e.g. through a ratings process, not surprisingly) employees may not really share feedback they'd actually like to share --and that you need to hear. (Ever wonder why the content of hallway conversations are so different from the comments you hear during meetings?) A work culture where people are expected to "toe the line" will be inherently demotivating; this is based on first hand observation and, sometimes, experience.
Perhaps even suggesting that teams, rather than individuals, get evaluated and rewarded as a single unit might actually help encourage real teamwork (i.e. shared success/failure). That way, even if John Doe spends his time helping out John Smith, Alice, and Bob to complete their work, it's clearly acknowledged that they're all contributing to the team moving forward b/c Smith, Alice, and Bob wouldn't have been able to finish their tasks without Doe's help --or at least not as quickly.
For example, I've seen management treat development teams as "an investment" and look at test and tool teams as "an expense", and yet, the products would've never made it out the door without any one of them having done their part. It's a real shame.
Sun Tzu had several things to say abount management. These few seem potentially relevant:
- "If orders are unclear, it is the fault of the general. But when the orders are clear, and are not carried out, it is the fault of the officers."
- "Regard your soldiers as your children, and they will follow you into the deepest valleys. Look on them as your own beloved sons, and they will stand by you even unto death."
I hope this lets you see that you bear more responsibility/accountability for the performance rating of your employees than they do themselves and why I think this is the case. Not only that, what you (don't) do also impacts their morale, team dynamics, and trust, among other things.
Lastly, this article on Compensation, by Mary Poppendieck, looks like a good and relevant read.
- Microsoft's Lost Decade
- Inside Facebook's 'cult-like' workplace, where dissent is discouraged and employees pretend to be happy all the time
If this made you sad and you care for some humor, Dilbert comic strips pretty much sums it up in a few frames:
- Excellent Work vs Evaluation Excuse
- Relative Performance Comparisons
- Above and Beyond
- Position-based Evaluation
- Ranked by Performance
- Predetermined Results
- Company Policy on Performance
- Fire the Bottom 10%