![]() Each key employee should be on a personalized tour of duty with a specific mission objective that improves both the company’s business and the employee’s career prospects.Instead, managers should treat employees like allies: Stack ranking employees who have very different roles, using largely subjective measures that have little to do with actual value, and making critical and irreversible decisions based on those rankings, tends to produce the negative effects cited by the critics. Receiving one or two “failing grades” has disastrous consequences and likely means the end of the employee’s tenure.The main purpose of the company is to create value.In most cases, each employee’s job is different, even if they have the same job title.Receiving one or two failing grades has few consequences students can re-take failed classes.The main purpose of the course is to teach and evaluate the students.Every student completes the same assignments and takes the same exams.Yet the context of a college course could not be more different from that of the workplace. I can recall one college physics final exam I took where the median score was 17 out of 100 “stack ranking” made a lot more sense to me than simply failing 90% of the students. College courses are often graded on a curve, a fact that draws little protest. Let’s consider a common situation in which stack ranking seems to make sense: education. The fact is that the implicit assumptions required for stack ranking to make sense simply don’t apply in the real world. Yet stack ranking suffers even more fundamental problems. According to critics, stack ranking produces excessive and unproductive internal competition, and discourages employees from helping their peers. ![]() Most of the criticisms of stack ranking center on the seeming arbitrary nature of the practice, which requires managers to grade their people on a bell curve, with a mandatory proportion of both 5s (excellent employees) and 1s (underperformers), regardless of the actual distribution of performance. Yahoo CEO Marissa Mayer has been criticized for implementing the practice of stack ranking, most notably in an excerpt from Nicholas Carlson’s upcoming book, Marissa Mayer and the Fight to Save Yahoo! that was published in the New York Times.
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