Steve Ballmer's departure from Microsoft, snidely remarked on here, has prompted any number of "What went wrong?" pieces to appear. One of the key documents, though, is from last year: Kurt Eichenwald's writeup in Vanity Fair. The editorial staff has helpfully illustrated it with a photo of Ballmer himself that's so characteristic of his style that it's liable to give ex-Microsofters the shivering flashbacks.
One of the common themes to all these articles is the company's use of "stack ranking", where you evaluate your direct reports and rank them top to bottom. The bottom performers get hammered, no matter how they might have done on some hypothetical absolute scale. If you happen to have a great group of high-performing people working for you - too bad. Some of them are going to be ranked at the imaginary bottom, and get punished for it. Here's Eichenwald:
At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.
“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”
. . .For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door.
You can well imagine the sorts of behaviors this system promotes. A Microsoft engineer said in the article that "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". What's even more dysfunctional about this system is that it was not officially acknowledged by the managers. Here's a former Microsoft employee writing in Slate:
Then I had to explain things to my reports. This illustrated another problem with the system: It destroyed trust between individual contributors and management, because the stack rank required that all lower-level managers systematically lie to their reports. Why? Because for years Microsoft did not admit the existence of the stack rank to nonmanagers. Knowledge of the process gradually leaked out, becoming a recurrent complaint on the much-loathed (by Microsoft) Mini-Microsoft blog, where a high-up Microsoft manager bitterly complained about organizational dysfunction and was joined in by a chorus of hundreds of employees. The stack rank finally made it into a Vanity Fair article in 2012, but for many years it was not common knowledge, inside or outside Microsoft. It was presented to the individual contributors as a system of objective assessment of “core competencies,” with each person being judged in isolation.
Why do I bring this up? Because many large drug companies persist in ranking-and-rating behaviors that are very nearly as stupid, and very nearly as destructive. And we've been doing it for years. At any rate, I've been complaining about it for years, and I'm certainly not alone. Rating people in research is notoriously difficult already, but rating them by jamming them into an artificial (and mathematically illiterate) template is even worse. If you want people to focus on stepping over each other, pit them against each other with a good, hard stack ranking system. If you'd like them to do something else with their time, you might want to rethink.