Microsoft pulls rank -- and makes its smartest move in years

Microsoft ditches stack ranking in employee reviews, but Machiavellian system reigns at Yahoo, Google, and Facebook

Big news: Microsoft is now less rank than it used to be.

Oops, sorry, I got that slightly wrong. What I mean is, Microsoft is no longer stack ranking employees, which has apparently been a big drag on morale at the Redmond campus. (You'd think having a raving madman as CEO for the last decade, a total lack of mobile strategy, or those Bill Gates/Jerry Seinfeld commercials for Windows Vista would be bigger drags on morale, but I digress.)

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According to an internal Microsoft memo obtained by The Verge, Redmond is adopting "a fundamentally new approach to performance and development designed to promote new levels of teamwork and agility for breakthrough business impact." I think whoever wrote that sentence ought to be sent to the meaningless business jargon reeducation camp and forced to write simple declarative sentences until their fingers bleed. (Sorry, another digression. Let's move on, shall we?)

Per the memo:

No more curve. We will continue to invest in a generous rewards budget, but there will no longer be a pre-determined targeted distribution. Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget.

You know the famous NSFW "coffee is for closers" scene in "Glengarry Glen Ross," where Alec Baldwin berates a roomful of broken-down salesmen for failing to foist worthless real estate parcels onto pensioners? That's apparently what it's been like to work at Microsoft under Steve Ballmer. But now that Stevarino will soon be on his way toward parts unknown, coffee is for everyone. Heck, feel free to add some nondairy creamer while you're at it.

Yahoo's your daddy?

Not so at Yahoo, which under Marissa Mayer has been cracking down on those freeloading coffee drinkers and other less-than-stellar performers, showing more than 600 of them the door since La Marissa's arrival.

According to AllThingsD's Kara Swisher, who claims to maintain a second office in the false ceiling above the CEO's desk at Yahoo Inc., Marissa's minions are none too pleased about it. Apparently the big problem is that managers are forced to grade on a curve -- somebody in their department has to be judged as missing their goals, even if nobody fits that description.

It seems that everyone who works at Yahoo is no longer above average, and nobody is handing out medals for participation.

Dare Obasanjo, a program manager at Microsoft who writes the 25HoursADay blog, spent a considerable amount of time analyzing the evaluation procedures at Apple, Google, Amazon, and Facebook. His conclusion: All of these companies do something similar, even if they don't call it "stack ranking."

(Do you think one of reasons Microsoft keeps screwing the pooch is because its top managers don't know how many hours are in a day? Or because they spend too much time reading HR handbooks for other tech companies? Sorry, it's that digression bug again, I can't seem to shake it.)

Obasanjo's other big insight: "The bottom line is that performance appraisal systems at large companies always suck."

(You know who else grades employees on curves? Hooters. Ba-dum-bump. Thank you, I'll be here all week.)

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