“I wanted to build a team of people who would work together and whose only focus would be on making great software”. Endless surveys were conducted and everytime the same answer would appear: Employees at Microsoft simply did not want to work together. Microsoft executives couldn’t understand why the company was struggling in the quality of its innovation compared with competitors such as Apple and Google. That meant employees were focused on gaining favor in order to receive a positive rating from their managers. The best way to guarantee a higher ranking, was to impress not only his or her boss but bosses from other teams as well. This created a focus around short-term performance, rather than long term innovation. 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”.Įmployees had their reviews biannually by supervisors - who were also subjected to ranking. “People responsible for features will openly sabotage other people’s efforts. Employees would try to do a good job, and, at the same time, work hard to make sure their colleagues did not. However, even when employees achieved these M.B.O.’s, they were still not guaranteed to receive a high ranking. Certain employees were given what were known as M.B.O.’s - Management business objectives - which were essentially the expectations for what employees would accomplish over a particular year. As the article states: ‘had microsoft hired top tech executives such as Steve Jobs of Apple, Mark Zuckerberg of Facebook, Larry Page of Google, Larry Ellison of Oracle, and Jeff Bezos of Amazon - regardless of their performance, under the theory of the stank ranking, two of them would have to be rated as below average, while another would have to be deemed as ‘poor’’.Įxecutives reported that some of Microsoft's top engineers would avoid working alongside each other out of fear that they would be hurt in their rankings. “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.” “It leads to employees focusing on competing with each other rather than competing with other companies.”Īt Microsoft, the stack system was simply flawed. Every manager was forced to place their employees on a scale from top to poor performers. At the center of Microsoft's cultural problem was their performance review system. Kurt Eichenwald explains that in the years Microsoft was supposed to be crippling its competitors, it instead crippled its employees. In November 2012, Lisa Brummel the Head of HR, announced that the company would be getting rid of the stack ranking system and replacing it with a process that had more emphasis on teamwork and employee growth. Kurt Eichenwald, the author who penned the article ‘ Microsoft's lost decade, blamed the system of stack ranking for the lack of company innovation. 2000 to 2010 had become known as the ‘lost decade’ - the decade, in which the then CEO Steve Ballmer, lost substantial market share from the likes of Apple and Google. Microsoft, the company that saw itself as market leaders in desktop computing in 1995, has had its share of problems over the past 20 years.
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