I haven't worked for Microsoft for some years, but when I did the stack ranking applied. Basically, no matter how good you were, the managers only allocated so many spots at the top. What was bad about it is it wasn't just ranking you against people on your own team but against all other teams in a given unit. So much for teamwork-if you think that someone else might get a promo and you won't simply because of stack ranking, why would you help someone else out? Plus, everyone knew that all the managers got together and discussed everybody on the teams represented. If you happened to have a manager that was pulling for you, but someone else was more quiet or not political, you have a leg up in the process.
For me, when I started working there, there were only 2 of us that had the appropriate certifications for supporting a technical product. We were on different teams, we both did telephone support, but my statistics were better than the other persons. Imagine my surprise when, in the first 6 months, the other person got a promotion. The only difference that I could see between us both is that he was constantly shmoozing his boss, where I was not with mine. I still, at that time, labored under the delusion that good work would get you noticed. When the promo happened, I immediately went to my boss and asked why I was not also given a promotion, especially since, all things being equal except that my work performance was better, I had not been rewarded. Funny thing, in the next few months I got a statuette, and then a promotion with a pay raise. But clearly what had happened is that the shmoozer in the first place, who had a boss actively promoting him in the stack rank, won over me, who had no idea that such a procedure even existed before that.
When Steve Ballmer announced his retirement (which hasn't happened yet but he's on his way out), there was a huge furor in the news over the stack ranking process (or "stank racking" as some call it). One of the best articles I read about it was in Vanity Fair in 2012. "Microsoft has become the thing they despised"
"Astonishingly foolish management decisions."
"[It] could serve as a business-school case study on the pitfalls of success."
"They completely blew it because of the bureaucracy."
Today, it's dead and collaboration lives.
From The Verge
Stack ranking is a process where each business unit's management team has to review employees' performance and rank a certain percentage of them as top performers, or as average or poorly performing. Former Microsoft employees have claimed it leads to colleagues competing with each other, especially when some employees in a group of individuals need to be given poor reviews to match the method.
From Wall Street Journal
Some current and former Microsoft employees say the software giant's system has serious flaws. Critics said the review program sometimes resulted in capricious rankings, power struggles among managers jockeying for their employees to get better reviews, and unhealthy competition among colleagues.
Lisa Brummel, the company’s head of human resources, said in an interview with GeekWire that the prior system was designed for an era where Microsoft was focused on employees as individual performers within a vertical corporate structure. The One Microsoft reorganization, which reshapes the company’s divisions around functional disciplines rather than products, is meant to make Microsoft more collaborative across product groups — with major releases and updates coming at a faster pace.
“A forced distribution wasn’t getting at the teamwork principles that we really want to get at related to One Microsoft,” she said.
Stack ranking does have some advocates, but it also has been blamed for fostering dysfunction at Microsoft and reducing morale among employees. At an internal presentation this morning, managers clapped when Brummel announced that the employee review process would be overhauled, and by the end of the presentation they gave a standing ovation.