Hmm, so the ranking system would actually encourage leaders of good teams to have hire poor performing members to act as their sacrificial employees come review time.
I've heard stories of exactly this happening. People hired just so they could absorb negative review scores. This is, obviously, dysfunctional on many levels.
Something similar happened to me. It's not necessarily that the hire is intended to be sacrificial, but it sometimes falls to the "new guy" to take the hit.
So after about 3-4 months of working at Microsoft, I was ranked in the bottom 10% (the bucket for people who don't have good prospects for furthering their career at Microsoft.) This was back when they used a 10/70/20 system.
Now, don't get me wrong, I don't think I'm some master developer that deserves to always be in the top 20%. I strive to be above average, but I consider myself to be merely average, especially compared to many of the exceptionally bright people working there.
Here's the real bitch. The reason I was given for this rating had nothing to do with my performance. I shit you not, and this is as verbatim as I remember it: "Somebody has to be in the bottom bucket and since you're new, I can't rank you higher."
The problem is that this stuff fucks with your career there. It's a black mark on your record that follows you around. HR assured me that someone being new is not a valid reason to rank someone like that, you have to base it on actual performance.
An easy fix that my previous company had employed: have a "too new to rate" category.
In retrospect, I just had a shitty boss, and it wasn't necessarily reflective of Microsoft as a whole. I also should have challenged it more vigorously, but I didn't want to create animosity between my boss and myself seeing as I was barred from transferring for.. 18 months was it?
I'm not too bitter about it though; I ultimately ended up resigning after a year and then coming back to work for the same department as a contractor at a much higher salary. As such, I no longer had to participate in performance reviews at all.
My company does stack ranking, and my first performance review mirrors yours almost to a T. And the distrust that it has created between my direct manager and his reports is horrendous. He always prefaces his evaluations (discussed personally with each of us) with "I'm limited to giving Exceeds Standards to only two members of the group." Said group having 18 members. He's not required to grade any employees as Does Not Meet Standards, unless they truly do. But know that I'm lumped in at the exact same level as the remaining sixteen coworkers is extremely disheartening. This just encourages employees to quickly determine the firing line.
The minimum performance required to avoid termination.
Not exactly. It does encourage a manager to increase the 'beta' of his team. That is, adjust hiring standards to take more risks and filter out the subsequent higher flow of poor performers in exchange for finding (but not necessarily retaining) exceptional performers.
stack ranking actively hinders managers from retaining exceptional performers. if you only have 2 A grades to give out and you have five people deserving of it ALL of them are going to be motivated to switch to lower performing teams or entirely new employers.
any sort of 'objective' evaluation of employees is prone to being gamed and any gaming of evaluation is actively harmful to corporate culture/performance. witness google where lower profile or troubled projects are abandoned en masse by any employees with the ability to turn them around
At that point, I would just drop the person who I dislike the most to the bottom of the bucket. After all, as a manager, I have no choice but to fill that slot, and given every-one has performed well on the job, what other heuristic can I use to select the "bottom 2"?
Or I may drop the person who I can get rid of with the least hassle, maybe the new guy who just joined the team or someone who has taken long leave during this period.
See how it works? Nothing to do with performance, and inevitably its the "A" performers who quit in disgust. And companies wonder why they cannot get talent to stay...
The more prevalent variant on this is managers would leave "room" in their review model for themselves. Come in under the curve and you leave room that makes it that much easier for your manager to reward you.
