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Microsoft's 'Cannibalistic Culture' 407

theodp writes "In the provocatively titled Microsoft's Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant, Vanity Fair offers a teaser for a story that will appear in its August issue on Microsoft's Lost Decade, which promises an unprecedented view of life inside Microsoft during the reign of Steve Ballmer. 'Every current and former Microsoft employee I interviewed — every one — cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees,' contributing editor Karl Eichenwald writes. 'If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,' says a former software developer. 'It leads to employees focusing on competing with each other rather than competing with other companies.' Also discussed is the company's loyalty to Windows and Office, which induced a myopia that repeatedly kept Microsoft from jumping on emerging technologies like e-readers and other technology that was effective for consumers. Having seen an advance copy of the full piece, GeekWire offers its take on what it calls an 'epic, accurate and not entirely fair' tale."
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Microsoft's 'Cannibalistic Culture'

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  • by DesScorp ( 410532 ) < minus math_god> on Wednesday July 04, 2012 @05:54PM (#40544977) Homepage Journal

    That may be the mother of misleading book titles. Microsoft has lost a step in some areas (as much due to Apple's ascendence as anything MS did wrong), but this sounds like one of those apocalyptic books you see about finance ("The Coming Great Depression" and stuff like that). It's essentially a tabloid headline on a book cover.

    • by thetoadwarrior ( 1268702 ) on Wednesday July 04, 2012 @06:02PM (#40545043) Homepage
      Yeah Microsoft will be like all those big brands like Nokia and Kodak and live on forever.
      • by RazorSharp ( 1418697 ) on Wednesday July 04, 2012 @06:09PM (#40545107)

        Of course. People will always need Office just as they will always need film. Oh, wait. . .

        • by fuzzyfuzzyfungus ( 1223518 ) on Wednesday July 04, 2012 @09:18PM (#40546571) Journal
          The parallel is actually pretty apt: Kodak had a fuckload of R&D, and patents, in digital imaging and the managed to throw more or less all of it away through a myopic focus on their legacy business.

          Similarly, this story isn't about how Microsoft has nothing but morons(they don't); but how they managed to take the good ideas generated by a decade plus of having all the smart people that gigantic bucketloads of money can buy, and suffocate them because they didn't look sufficiently like Windows, or interoperate in an obvious way with Office.

          That's the real trick. Any moron can become irrelevant because their core product comes under some sort of unstoppable structural pressure. It takes talent to ensure that you squander your good ideas(and, in some cases, years-long leads on the competition) on the altar of your core product, and then become irrelevant because your core product suffers structural pressures...
          • by catmistake ( 814204 ) on Wednesday July 04, 2012 @09:45PM (#40546749) Journal

            The parallel is actually pretty apt: Kodak had a fuckload of R&D, and patents, in digital imaging and the managed to throw more or less all of it away through a myopic focus on their legacy business.

            Completely false. Kodak did nearly the exact opposite of what you're claiming. What killed Kodak wasn't "myopic focus on their legacy business," as they developed a decent plan with foresight for a shift to digital (Kodak's first digital camera was 1975). What killed them was low margins in the commodity market of digital photography. Had they recognized the wave of competition in digital and the commodization of digital cameras, and instead of shifting to low end competitions with manufacturers of cheap equipment and focused on the higher-end large margins in the commercial market (as IBM did with computers), they might have survived. Kodak is a casualty of the speed of technological innovation in a low end market, unlike Microsoft in every way, which is an arrogant behemoth in comparison. Unlike Kodak, Microsoft never innovated anything ever... their modus operandi [] is to purchase or copy innovation, and force their smaller competition out of business by flooding markets with inferior product.

          • by hairyfeet ( 841228 ) <bassbeast1968@gm ... minus herbivore> on Wednesday July 04, 2012 @11:50PM (#40547635) Journal

            I think there is an even better comparison...AOL. For awhile AOL practically ruled the consumer Internet market but even when they got products like WinAmp that were insanely popular they smothered them to death because EVERYTHING had to tie into "the service" and it got to the point everyone working there either quit or just quit giving a fuck.And just like MSFT AOL found themselves in charge of a market that simply stop growing and although it won't just die as dialup did it'll never be as big as mobile is ever again.

            You look at everything MSFT is doing right now and its the same thing, they just keep trying to tie everything into Windows and Office even if it doesn't make any sense. i mean including Office on WinARM when they haven't even included AD or GPO support? Its a fricking consumer OS, it makes no damned sense! But some PHB said it HAS to tie in, hence Office.

            Sadly looking back I'd have to say the best damned thing that could have happened to MSFT would have been if the courts would have split them up, because with so many groups fighting among themselves and so many things being pushed to tie into the two sacred cows of MS Windows and Office they really are backed into a corner there. If mobile would have been split off from Windows maybe they wouldn't have given us a decade of teeny tiny start buttons on WinCE devices, nor would we be seeing Ballmer taking a crap on the desktop just so he can try to gain a couple of shares in the smartphone arena.

            Anyway you look at it while MSFT has a steady revenue with their sacred cows there is just no growth there and with the corporate culture its looking more and more doubtful they will be able to branch out.

      • Yeah Microsoft will be like all those big brands like Nokia and Kodak and live on forever.

        Or IBM, remember when they used to be a going concern? Oh wait, they still are. Companies can adapt, and Microsoft is, far and away, the number one provider of operating systems and office software in the word... still. Like I said, they seem to have lost a step, but so what? Ford lost a step with the Edsel. It didn't kill them. Predicting doom for Microsoft at this point is just stupid.

          • Re: (Score:3, Insightful)

            by Gorobei ( 127755 )

            Nice charts, and on the money.

            Microsoft, like RIM, is basically doing unloved corporate infrastructure at this point. They are seriously 3 iPhone apps away from becoming a non-entity:

            Mail: I get 1000+ messages a day. I ignore and/or delete.
            Calendar: Still useful, but not as a real calendar, I have triple booked time slots.
            Powerpoint: Mostly just a tool to get the pacing of a talk right.
            Excel: When's the last time you saw a what-if scenario in excel? This is now just a data presentation tool.

            There are N star

          • by hairyfeet ( 841228 ) <bassbeast1968@gm ... minus herbivore> on Thursday July 05, 2012 @12:01AM (#40547715) Journal

            Actually the chart is telling, but not in the way you think. Look at the peak, between 2004 and 2006, what happened then? The end of the MHz war because of the thermal barrier and the rise of the multicore, that's what.

            I know plenty of folks and even plenty of businesses on first gen Phenom Is and Core duos, are they poor? Nope there is just nothing they do that stresses those chips which are now over 5 years old. look at that chart again and see how quickly it was climbing when AMD and Intel were topping each other in speed with every release, then look at how much faster it drops around 2007 when multicores became cheap for the masses.

            In the end the reason why those numbers simply aren't keeping up with Apple is there is no reason to replace PCs anymore whereas Apple is going through their OWN MHz race in the mobile sector. Also thanks to the switchover to intel nobody has to choose "either/or" anymore so they can just pick up a copy of OEM Windows and run bootcamp (which your chart doesn't figure in, only new PCs sold) while still having the hipness of the frankly nicer looking Apple hardware.

            Mark my words if you produce a chart for ARM 5 years from now you'll see the same thing, as i predict they will run into their own wall in less than 3, only instead of thermal it'll be battery life. Then just like with PCs people will simply keep them until they die, although naturally their sales will be a little higher as its easier for your dog to eat your phone than your desktop.

      • by LordLucless ( 582312 ) on Wednesday July 04, 2012 @06:51PM (#40545379)

        You're missing the OP's point. He's not saying Microsoft isn't going to fall, he's saying it hasn't yet and publishing a book entitled "Microsoft's Downfall" is making a prediction that isn't based on any actual fact, but just sounding portentous and drumming up controversy.

        • by GaratNW ( 978516 ) on Wednesday July 04, 2012 @09:02PM (#40546443)
          Excellent point, but the headline is not entirely inaccurate. As someone who worked there from 1998 through to 2004, and with a large number of friends still there, the company has gotten really bad. It has a shadow of the potential that it used to. Not because there aren't amazing elements in some of their products (Metro, love or hate, is a pretty remarkable UI evolution - Please, no posting to that retarded AOL image or whatever it is; plenty of other examples of good ideas surrounded by bad; Forcing metro by default in the desktop, for instance), but the company is its own worst enemy. VPs fighting VPs, a culture that started as productively competitive that has turned into destructively competitive - I'm not talking about the market, I'm talking about internal competition and non-stop backstabbing and product infighting.

          To paraphrase the Joker, "This company needs an enema.". And the first step is flushing Ballmer. People often underestimate how much of the culture stems from the top down, even at a 70,000 person comapny, but Ballmer, despite being a brilliant business man, is a horrifically bad visionary and leader.
    • by theRunicBard ( 2662581 ) on Wednesday July 04, 2012 @06:23PM (#40545173)
      Oh, "Downfall" is more accurate than you think. Microsoft won't last unless it changes significantly. There are several things working against it: Programmers hate Microsoft. Every university, every professor, everyone works on a unix-based system. This leads them to Linux/Unix. Ballmer then slams those and calls them parasistes (look up his views on the GPL). So where do these really talented programmers go? Unless they can't help it, not Microsoft! So now you have unskilled workers. The best go to Google, then facebook, then amazon, then startups, etc, and Microsoft gets whatever is left. Is it any wonder their technology isn't as good as Google's? It's gotten so bad that even their own employees notice. Do you know what a Microsoft employee uses at home? Linux/Mac. Do you know what they use to listen to music? Maybe a Window's Phone but just as likely an iPhone. What do they read their books on? iPads. How do they send their personal emails? Gmail. An employee at Google would take a bullet for the company. An employee at Microsoft is wondering how long until the next iPad comes out. This might not be a completely fair review on my part, but it sums up my views. And the way I see it, a company like this just CAN'T compete with the rest. The only thing they have going for them is that mixture of Steve Ballmer's bottomless money bag and the fact that the average computer user will just use whatever OS comes with their box and that's going to be Windows. But that's not a solid business plan and they need to change.
      • by Billly Gates ( 198444 ) on Wednesday July 04, 2012 @07:11PM (#40545551) Journal

        Why is this funny?

        It is exactly what is happening. Once consumers start buying more of these devices than PCs the software will start to be ported over and be gradually as good as the desktop versions. Then corporations will notice and leave ship too next.

        I admit we are far from that at the office but businesses are 6 to 7 years behind consumers. The lockin is gradually going away and even if Windows 8 catches on MS will be screwed because they do not control the w3c standards like they once did and these apps can be ported over to Andriod and IOS fair easily.

      • by Anonymous Coward on Wednesday July 04, 2012 @07:40PM (#40545759)

        I work there, and I can tell you don't have a clue. The biggest problem MS has with hiring is competing for those few people that learned to program in C/C++ instead of Java, or some other interpreted language. We get summer interns that are good all the time, some get offers and work out well, other wash out in less than 4 years. Its not because of stack ranking though, its because of lack of desire or capabilities, Those that perform their job well and consistently get promoted quickly. Some long term employees get to a certain level and then stagnate, and when they're shown the door they blame the stack ranking process because their peers passed them by.

        Also note the higher in level you are the broader the ranking becomes. Many of the people in the Vanity Fair article were stack ranked division or corporate wide, not within their own team. Then were let go as part of the dead wood trimming during the layoffs when the economy went south.

        • Don't worry, if actual Microsoft employees dismiss this story, they will be dismissed by Slashdot. All hail Linux! You see Slashdot has this post ranking system where they...ah shit.
        • by shutdown -p now ( 807394 ) on Thursday July 05, 2012 @03:03AM (#40548585) Journal

          There are plenty of quite capable people that are screwed by stack ranking. Just because you don't know any (or have convinced yourself that they aren't actually good), does not actually make it so.

          The flaw in stack ranking is quite obvious - it's a system that, when you have a team consisting of Steve Wozniak, Linus Torvalds and John Carmack, says that one of them must be ranked as "good", one as "average", and one as "bad". Needless to say, when someone that good is ranked in the lowest bucket and has an embarrassing "talk" with his manager (which is actually often more embarrassing to the manager, since they have to give some humane explanation for the ranking - and often there simply isn't any), they get pissed off and quit. Heck, even if they were actually just average, why tell them they're bad? There's this inane idea that by stack ranking you get to keep the best and the brightest while getting rid of the "deadweight". But in practice all it gives you is the constant churn of people who aren't quite geniuses, and every now and then it makes a genuinely good guy to quit (not always because he falls victim to the system; smart people tend to see the flaw in it, and quit while they're the king of the hill rather than wait for the bucket to be passed to them).

      • An anecdotal data point backing this up is that one of my business contacts goes to meetings at Microsoft and when the MS people pull out their cell phones, 6 of 7 are iPhones.

    • by cpu6502 ( 1960974 ) on Wednesday July 04, 2012 @06:44PM (#40545325)

      Yeah it would be more accurate to say "Microsoft's Stagnation". They were the #1 desktop/laptop OS in the 90s and still are today. The problem is that they didn't expand beyond that paradigm, and missed the boat on the cellphone and MP3 player OSes (currently dominated by Google and Apple respectively).

      Oh well. BTW Microsoft has never been an innovative company. Never. They won the PC-DOS contract in 1981, overlaid it with Windows GUI 4 years later, and that was about it. It was other companies like Atari, Commodore, and Apple that were doing the innovating..... constantly pressing forward with new ideas like music-quality sound, video-quality graphics, multitasking, mouse-based interfaces, and portable computers. MS just say by and watched.

      • Re: (Score:3, Interesting)

        by Anonymous Coward

        Back in their glory days, Microsoft was a very "Fast Follower", so while they were rarely the first with a piece of tech, they were very often right behind. They were very agressive at ensuring no market segment escape them, often using old IBM "vaporware" tactics to chill interest in the competition, as well as underpricing them. They were absolutely paranoid that someone was going to do to them what they did to IBM.

        Compare this to modern Microsoft where Ballmer completely dismissed the iPhone and their mo

      • by theArtificial ( 613980 ) on Wednesday July 04, 2012 @10:05PM (#40546899)

        Microsoft has never been an innovative company. Never.

        They came up with AJAX [] and prior to that Iframes, maybe you've heard of those?
        Microsoft had the first console [] to feature an internal HD eliminating the need for memory cards for save games among other things.
        Intellisense is amazing (it's an example of auto completion done well).
        The scroll wheel on a mouse []. The first optical mouse.
        The first mouse featuring backwards and forwards buttons.
        First mainstream ergonomic mouse. []
        While not the first, they're responsible for ergonomic keyboards [] (due making them affordable, just like PCs)
        Teraserver [] (1998 [] a precursor to Google Earth)
        Involved in the creation of the browser useragent []
        Video codec innovations which led to VC-1 being the premier codec for HD-DVD and BR discs.
        Helped establish TrueType []
        ClearType []
        The Taskbar
        Ability to alter compiled code while debugging it
        Dynamic HTML desktops
        Lots of small innovations in .NET that when combined equal large cumulative innovation.
        Alt tab to switch between applications
        Photosynth []
        Microsoft OneNote []
        First OS to have a 3D Sound api for games
        Shadow Copy []
        Certainly that should qualify as an innovation.

        They won the PC-DOS contract in 1981, overlaid it with Windows GUI 4 years later...Apple that were doing the innovating.....

        By giving Xerox a bunch of stock in their company for access to their GUI technology, essentially buying technology just like Microsoft?

    • by dido ( 9125 ) <{hp.muirepmi} {ta} {odid}> on Wednesday July 04, 2012 @07:38PM (#40545743)

      If you are old enough to remember what Microsoft was like around the late eighties and up until about the early-2000's, you would realize that they are no longer the force to be reckoned with that they were back then. Yes, they are still a very wealthy and profitable company, and will probably remain so for decades more, but they are no longer the force to be reckoned with that they were in the time I speak of. Back in those days Microsoft inspired such fear into the hearts of those in the software industry that before beginning a software venture people would ask: "What would Microsoft do in response to this?" and even the vaguest hint that Microsoft was getting into some field would be sufficient to dissuade the faint of heart from even getting started and risking competing with Microsoft head-on. Those days are long gone, and now the companies that have sort of inherited that mantle are Apple and Google (but it seems that even put together they don't have even half of the kind of terrifying aura Microsoft exuded back in those days). Their loss of this kind of power does not mean that Microsoft will cease being profitable or even that they'll stop growing, far from it. It simply means that they've become irrelevant to the leading edge of the software industry, just another stable, stolid, boring company like IBM or SAP.

      This is what Paul Graham meant when he wrote that Microsoft [] is Dead [].

    • by fullback ( 968784 ) on Wednesday July 04, 2012 @09:49PM (#40546781)

      Microsoft is the McDonald's of the desktop. They'll both be around a long time, serving up crap.

  • by ffflala ( 793437 ) on Wednesday July 04, 2012 @06:06PM (#40545083)
    ...and it has the same results. Law schools grade this way. It simply adds a very real incentive to undermine those in your group. It forces competing against one another for individual gain, often to the detriment of group progress.

    It sort of makes sense for law students whose focus will be litigation, since they are training for an adversarial environment. It also ensures that the lowest performers are consistently swept out.

    However it rests on the assumption that the lowest performers are necessarily and always detrimental to a group overall. This of course isn't true, since every single group will have a highest and a lowest performer. The other downside is of course that it promotes individual interests over group interests.
    • by Anonymous Coward on Wednesday July 04, 2012 @06:25PM (#40545195)
      Mostly, stack ranking makes employees focus on butt kissing. Reviews are subjective so the manager's favorites get the good ranking regardless of actual performance or value to the company.
      • by rtb61 ( 674572 ) on Wednesday July 04, 2012 @09:08PM (#40546491) Homepage

        I find the whole process of stack racking fascinating in a Machiavellian point of way. It really points to incompetent management who have no idea how to motivate staff, how to create effective productive teams and of course how to create a healthy working environment. Basically it screams we have no idea what we are doing so we are going to introduce dog eat dog, into the work environment and let itself sort itself out and blame everything on middle management and take credit for any success.

        I would look at stack racking in employee evaluation as a solid indication that a company has psychopathic corporate executives in charge. They enjoy the carnage that results, they revel in the benefits of favouritism, include gifts and sexual favours, the enjoy the ego boost of being able to destroy more competent people and they thrive in the hostile environment created. Insane people driving insanity in order to make themselves appear normal. This certainly explain a lot about M$'s failures in new product lines. No one willing to take risks, top to bottom favouritism and ensure the job permanence of current graders. A top to bottom scheme to ensure the survival of Ballmer and nothing else.

        • by shutdown -p now ( 807394 ) on Thursday July 05, 2012 @03:14AM (#40548625) Journal

          Direct managers actually hate stack ranking, because 1) they are the ones having to play the game of "kick the other guy down to promote your own", and 2) they have to explain people why they have an "underperformed" rating when they actually worked quite well in the review period, just not as well as someone else on the team.

        • by wanax ( 46819 ) on Thursday July 05, 2012 @06:36AM (#40549455)

          Having read "The Smartest Guys in the Room" about the Enron debacle, I think a large part of the Enron collapse story was essentially a fallout of stack ranking -- a form of which they employed -- the remarkable thing, though, was that Skilling in particular and the other top managers were such libertarian wackos that they thought fostering internal competition within teams and between business divisions was a good thing. And then they combined this with a system where bonuses were paid based on deal sizes based on mark-to-market accounting, so the originator got a bonus and there was virtually no monetary incentive to actually service the back-end of the contract (and thus actually get paid and maintain a revenue stream.. but that's a different story).

          Some of the behaviors that came out of that culture are hard to believe..
          -The trading desks in different divisions taking opposite sides of the same position with leverage, guaranteeing the company loss (but not the division that won the trade)
          -New MBAs were hired all the time, but not initially assigned to a team. They essentially had to shop themselves around, and were more or less allowed to transfer between teams at any time early in the process. Near the end this led, essentially, to something like 20% of the Enron workforce being shuffled around from team to team near evaluation time to take the 'bad slots' in the evaluation.
          -They set up an entire subsidiary, Enron Energy Services, that would only be financially viable in the long term if deregulation in California succeeded, and became a national model... while having a division who's entire performance/bonus criteria was dependent on how badly they could exploit loopholes in the deregulation to make a short term profit from trading.

          I think the bottom line is that if you let this type of Machiavellian culture take hold, it essentially means that you don't have a functional leader -- they've abrogated there responsibilities to the political abilities of their subordinates. If you look at Northern Italy and the northern part Holy Roman Empire, the former had no leader, de facto or de jure, while the latter had one de jure. Neither of those areas managed to centralize authority until 1860 and 1870 respectively, about 200 years after England, France and Austria managed to do so from more or less the same feudal starting point (they had leaders that were willing to intervene decisively in baronial disputes).

    • by lennier ( 44736 ) on Wednesday July 04, 2012 @06:28PM (#40545213) Homepage

      Law schools grade this way. It simply adds a very real incentive to undermine those in your group.

      And that one fact explains so much about Western culture today that it's scary.

      • by cpu6502 ( 1960974 ) on Wednesday July 04, 2012 @07:01PM (#40545447)

        I like how one MS employee put it: They advertise for Internet Explorer's team..... they want the best 4.0 level talent on that team. Problem: Once that talent arrives only three out of ten will actually get the 4.0. The rest will get a mediocre 3.0 which makes them feel unappreciated. And the bottom two will be shown the door, even if they truly are top talent. (Probably headed off to google and chrome development.)

        • Re: (Score:3, Interesting)

          by x3CDA84B ( 2592699 )

          Exactly. It's as if MS' management are deliberately trying to prevent anyone from actually having an all-star team. They're also completely failing to understand that psychologically, for most people rewarding top performers will produce better results than punishing low performers, even though if you look at it as a math equation, they can be identical.

          This stupid way of managing people is one of the main reasons I would never in a million years work at Microsoft, or other companies that use similar method

          • by NotSanguine ( 1917456 ) on Wednesday July 04, 2012 @08:52PM (#40546353) Journal

            Exactly. It's as if MS' management are deliberately trying to prevent anyone from actually having an all-star team. They're also completely failing to understand that psychologically, for most people rewarding top performers will produce better results than punishing low performers, even though if you look at it as a math equation, they can be identical.

            This stupid way of managing people is one of the main reasons I would never in a million years work at Microsoft, or other companies that use similar methods (Amazon, etc.).

            I've been reading these critiques of "stack ranking" and, as a former MS employee, I understand why MS does "stack ranking" even though it's ultimately detrimental to the organization. Microsoft is a sales focused organization, not a technology focused one. When managing sales people, you want to keep the highest performers happy (and selling as much as possible). Nothing motivates a salesman more than knowing that if they don't produce, out the door they go.

            Since Microsoft has always been run by salespeople (Billy G. included and Ballmer is the quintessential salesjerk), it makes sense that they should use sales management techniques within the organization. the problem, of course, is that just because you're not one of the top developers on a dev team, it doesn't mean that you suck. It means that you have colleagues that you can learn from and improve your skills -- potentially making a good developer a great developer.

            Stack ranking is a piss-poor way to evaluate development groups. It has also created an atmosphere at MS where personal relationships are more important than performance. It has also created an environment where being seen as being involved in "the next big thing(TM)" causes employees to ride the waves of high-profile projects and then jump ship when their visibility is reduced. I saw so many good ideas die while I was at MS just because something newer and shinier appeared and those upwardly mobile types just dropped the ball without looking back. It was kind of sad to watch, actually.

    • by jo_ham ( 604554 ) <> on Wednesday July 04, 2012 @06:34PM (#40545257)

      This is the first time I've heard of stack ranking (you can tell I haven't worked in a corporate environment) and it strikes me as the most stupid, ineffective, counterproductive load of nonsense I have ever heard.

      It is instantly obvious that it's a shit idea when you realise that you are obligated to have a set number of results at each grade level, so it will fail the minute you get a team that doesn't fit that perfect theoretical curve (many more good than bad, or all bad etc).

      "Seven of you scored well enough to get the top grade, but I'm only allowed to give out 3 top grades, so I randomly picked those top three or simply chose the best ass kissers"

      The four who don't get it are now disgruntled and lose motivation, and perhaps start looking for somewhere that appreciates them.

      I can't believe this utterly retarded system got past the "throw us a crazy idea!" stage at a management meeting. Oh, management... of course. All is explained.

      • by b4dc0d3r ( 1268512 ) on Wednesday July 04, 2012 @07:11PM (#40545559)

        The reasons behind these decisions often make sense, in theory. And as we all know, practice is not theory.

        I've worked at Fortune 150 to Fortune 10 companies. This type of ranking comes in when someone at the top is cost cutting, and wants to drive away the worst performers. Forced ranking makes it easier to tell managers to rank people, then later ordering the bottom person gone for all teams above a certain number. That way managers don't have to decide who goes, in the same way as if they were ordered to choose one person.

        When the company recovers, employee surveys (and exit interviews) cite this as the reason for leaving, and this system goes away.

        I'm not sure we can trust the specifics, but if this plan were in place 5 years or more, it points out a management who is completely unconcerned as to why people leave the company. Microsoft has raise concerns about poaching - maybe they legitimately believe other companies are just making overly high offers to get talent, rather than people leaving because of a hostile workplace.

        I think over the past few years this has gone out of style in many places, but it does take a while for the shared MBA pool of knowledge to trickle down as new graduates replace outgoing ones, or someone makes a 20 year stagnant career in the same position, refusing to change their ways.

        Which is one reason large companies push career development. If you don't aspire to get a promotion, you are going to eventually get fired - this is the message. Pushing people to move around voluntarily means you can count on at least a few new opinions introduced, But when you push the great architect into a mediocre middle manager, you've hurt the company twice - losing the architect and gaining bad middle management.

        Good ideas always have a downside, and good management knows when to recognize when the cons outweigh the pros. Half of the managers are at or below average, so I wouldn't expect much more than following orders.

        • by Dunbal ( 464142 ) *

          That way managers don't have to decide

          Except, isn't that what managers are paid to do? It's like the judge who says "I have no choice". Why bother even having a judge in that case.

      • by bertok ( 226922 ) on Wednesday July 04, 2012 @10:17PM (#40546973)

        This kind of stupid shit happens because management is not a science!

        Just like how before chemistry we had alchemy, and before medicine we had blood letting, you're seeing the pre-scientific version of management. It shouldn't be surprising that it's a joke.

        I've read a bunch of management books and the whole time I was screaming "CITATION NEEDED" inside my head. They're full of unscientific but plausible sounding mumbo-jumbo, and ridden with weasel words. No numbers. No studies. No control experiments to demonstrate an improvement relative to the existing gold standard. Probably because there aren't any standards to begin with.

        Take stack ranking for example: how would you even begin to measure the effectiveness of such as technique, relative to other employee review systems? What units would you use? How would you run this experiment? I bet you can't answer this. I bet the person who came up with stack ranking can't answer it either.

      • by hawk ( 1151 ) <> on Thursday July 05, 2012 @01:06AM (#40548075) Journal

        Nah, there's worse.

        remember Hawkins' Second Law: There is no lower bound to human intelligence.

        I had a student a ew years ago who worked for a company that overdosed on 80/20. They ranked their customers by sales volume, and informed the bottom 20% that they could take their business elsewherere, as their orders would no longer be accepted.

        Uhm, now how do you get new customers, since their starting volume will be below your threshold. And of your, uh, surviving customers, doesnt 80/20 still apply? So dump some more?

        I wish I was making this up, but i spent a lot of time with this student.


    • by ppanon ( 16583 )

      Exactly. Stack ranking is pretty similar to how Jimmy Pattison car dealerships used to (and may still) work for car sales - the lowest performing salesman each month gets let go and someone new is hired. It's effective if you're dealing with unskilled labour and there's a huge supply of the labour you're looking for.

      However if you're dealing with a labour force where you claim there's a shortage of skilled workers and you're trying to hire the cream of the crop, telling the majority of those workers they're

  • by WiiVault ( 1039946 ) on Wednesday July 04, 2012 @06:08PM (#40545095)
    MS has always hired some of the best and brightest, but for years the output has been unable to match. So if you have top people, but you can't produce stuff people want than what is the issue? Management. Duh. I know, and I'm sure many others do too plenty of smart people in the biz. The difference between the Apple, Google, and MS guys is slim at best. But what gets produced is obviously not favorable to MS in quality or innovation. Innovation to Balmer seems too "out of box" and scary to be worth it, so instead he comes late to every. single. party. in the last 10 years.
    • by UnknowingFool ( 672806 ) on Wednesday July 04, 2012 @06:48PM (#40545349)
      Steve Jobs led Apple in the direction he wanted. People can disagree with that direction but it was clear who was in charge. Ballmer manages MS so that it doesn't lose their monopolies. That's the big difference I see. If Jobs was in charge, I don't think the Vista Ready/Compatible disaster would have happened. The crux of it was a lower level exec made a decision to reverse course on key hardware requirements that left many consumers with PCs that were not really fully Vista capable but it wasn't clear to consumers what that meant. Ballmer just let it happen instead of stepping on someone's toes.
    • MS has always hired some of the best and brightest, but for years the output has been unable to match. So if you have top people, but you can't produce stuff people want than what is the issue? Management. Duh. I know, and I'm sure many others do too plenty of smart people in the biz. The difference between the Apple, Google, and MS guys is slim at best. But what gets produced is obviously not favorable to MS in quality or innovation. Innovation to Balmer seems too "out of box" and scary to be worth it, so instead he comes late to every. single. party. in the last 10 years.

      That's true, as did Gates for 20 years before that. Microsoft NEVER innovated, never risked, always claimed that emerging technology was a fad and whatever market they already dominated was the only way to go. They let other companies develop technologies, and when the times is right, Microsoft swoops in and buys them out, and rebrands the products as their own. The difference is that Gates was good at this form of evil. Ballmer not so much.

  • by gallondr00nk ( 868673 ) on Wednesday July 04, 2012 @06:11PM (#40545119)

    They had very similar performance reviews at Enron

  • by Anonymous Coward on Wednesday July 04, 2012 @06:22PM (#40545167)

    We had something like this where I worked for a couple of years. It's gone now (at least, nobody talks about it), everyone hated it from the middle managers on down. It was based on the "lifeboat", which they mention briefly in the article. The term I got from the article "learned helplessness" is so perfect I wished I'd known it when this was going on.

    The first year they ranked everyone in the same "grade" together. If your manager tried to do what HR said and rank people then there would be a few other managers who said everyone on their team was perfect, and therefore you'd get pushed to the bottom of the list for raises. Also, unpopular or inexperienced managers would get their entire team screwed.

    The second year it was just among members of your team but the managers HAD to have some percentage who sucked (who would get the ranking you were normally given before you got fired). It didn't matter if that person was productive or not... their thinking was every team must have a slacker who can be fired. Small teams were the worst off here.

    HR sucks everywhere.

  • by Anonymous Coward on Wednesday July 04, 2012 @06:37PM (#40545281)

    As a former Microsoft exec, my observation was that most blue badges above level 62 spent 30% of their time on work and 70% of their time maneuvering

  • by mister_dave ( 1613441 ) on Wednesday July 04, 2012 @06:38PM (#40545297)

    Also discussed is the company's loyalty to Windows and Office, which induced a myopia that repeatedly kept Microsoft from jumping on emerging technologies like e-readers and other technology that was effective for consumers.

    They'd be foolish not to be loyal to windows and office. Those were/are two fabulously successful products.

    I think there is a strong case for MS ignoring any options for broadening their product range, and just focussing on their existing winners.

    • Like the buggy whip makers? Sure, stick with your strengths. But the consumer is fickle, and when they decide to move on you either give them something to move on to, or stagnate. From the article, Microsoft has repeatedly rejected any opportunity which might lead them to having a strength other than Windows and Office.

      I almost mentioned their effort with XBox, but my dashboard is upgraded to have a billion ads, Bing search, Windows Media. It's a crapfest, and it's bringing the XBox closer to the core

  • by Wansu ( 846 ) on Wednesday July 04, 2012 @06:48PM (#40545351)

    This concept was foisted upon the world by former GE CEO Jack Welsh. It has ruined one company after another and is an example of the cure being worse than the disease. Watch out when your company hires in HR people from places like GE, IBM, Microsoft, Nortel, AT&T, etc.. They will try to get a promotion by implementing a slightly different version of this which will have about the same results.

  • by PopeRatzo ( 965947 ) on Wednesday July 04, 2012 @06:51PM (#40545375) Journal

    A summary of an article about a story about an as-yet-unpublished article.

    What a wonderful world.

  • by hamster_nz ( 656572 ) on Wednesday July 04, 2012 @07:00PM (#40545445)

    We had the same at HP - if you got the bottom ranking twice in a row you were asked to leave. We had a stable team of 10 engineers, all of which were good at their job but one had to be ranked as incompetent.

    We working through the list alphabetically, so everybody got it once in a while but never twice in a row.

    • by Osty ( 16825 ) on Wednesday July 04, 2012 @08:52PM (#40546359)

      But then you all have a black mark on your record, making it harder to move teams. And compensation is directly tied to review ratings, so for the review period where you get the short straw you may get nothing -- no raise (not even cost of living/inflation), no bonus, no stock. Just an uncomfortable discussion, a bad mark on your review record that will send up a red flag to other teams, and the hope that your manager doesn't get replaced with someone else who doesn't follow the previous manager's rotation and will pigeonhole you based on your previous bad review.

      Jack Welch implemented stack ranking at GE when the company was over-sized and performing poorly. It was intended to be a short-term (couple year) measure to identify and weed out underperformers. It was not intended to be a long-term business standard. Filtering out 5-20% of your work force every year is not sustainable (why do you think Microsoft complains about the lack of H1-B visas?), and the system is ripe for exploitation. Your manager exploited the system in an arguably good way (making the best of a bad situation), but plenty of managers will use stack ranking to get rid of people who are competent but have somehow rubbed the manager the wrong way, or in a misguided attempt to retain talent (give them a good review and they will leave to better things, but give them a bad review and no other team will take them and they're left with the choice of staying where they're at or leaving the company entirely), or as an exercise in empire building (make your way up the corporate ladder by bringing along people below you to push you up at the expense of others who may be more competent but less willing to play politics).

      Part of the problem is that stack ranking is so pervasive in the software industry. All of the major companies do it. Smaller companies do it because the big companies do it. Every now and then you'll find someone unique like Netflix, but if you leave Microsoft for Google, or HP for Amazon, you're just going from one stack ranking system to another. The individual details may be slightly different, but the overall system is the same.

  • by bbbaldie ( 935205 ) on Wednesday July 04, 2012 @07:20PM (#40545623) Homepage
    I worked at a place that manufactured snack cakes with a cute little girl as their trademark. I worked there 13 years as an hourly employee, then got promoted into their IT department.

    It was great for five years or so, then the third generation of this family-owned started flexing their muscles, invoking a new unsaid policy that unless you could prove otherwise, the assumption was that you were a lazy goof-off who should be demoted or fired.

    Thus was born the semiannual evaluations from hell process.

    I would typically spend 20-40 hours applying loads of manure to my evaluation in an effort to be spared the axe. So would every other salaried employee in the billion-dollar company. This was time that could have been used in improving our production numbers via technology (I was an intranet developer). Instead, we had to slather our way though an incomprehensible eval process that forced us to make predictions based on absolutely no data. Basically, we had to try to read the minds of a couple of dysfunctional family members who now found themselves in officer positions.

    They probably couldn't get warehouse worker jobs for Wal-Mart, thank God (for them) that they were members of the family.

    I've been gone about a year now, others are going over the wall as other jobs make themselves available. The company has managed to grow in a bad economy, but when things get better, I predict a Microsoft-like turn for the worse, as folks who can afford Hostess or Dolly Madison snack cakes leave in droves.

    I'm not saying that the psychotic salaried evals are causing the downfall of the company, but they certainly are a barometer of how things in general are going. Just like Microsoft.

  • by Steve1952 ( 651150 ) on Wednesday July 04, 2012 @07:22PM (#40545631)

    According to Wikipedia: Decimation (Latin: decimatio; decem = "ten") was a form of military discipline used by officers in the Roman Army to punish mutinous or cowardly soldiers. The word decimation is derived from Latin meaning "removal of a tenth".[1] A unit selected for punishment by decimation was divided into groups of ten; each group drew lots (Sortition), and the soldier on whom the lot fell was executed by his nine comrades, often by stoning or clubbing

    OK a valid if harsh form of management, but note the critical distinction that the Romans reserved this very harsh technique for unusual events. They were not dumb enough to do this to every unit on a routine basis!

    • by Wansu ( 846 ) on Wednesday July 04, 2012 @07:41PM (#40545767)

        "... the Romans reserved this very harsh technique for unusual events. They were not dumb enough to do this to every unit on a routine basis!"

      Neutron Jack was right about companies accumulating dead wood. They can and do. Used on a one time basis to get shed of non-productive workers, Rank and Yank is highly effective. But then they keep doing it on a routine basis. On subsequent iterations, they get rid of good people. They become so fixated on this process, it becomes an end in and of itself. I wonder whether Welch knew what he had set loose upon the world.

    • by NilleKopparmynt ( 928574 ) on Thursday July 05, 2012 @03:30AM (#40548695)

      I think your parable is very apt. I worked for Microsoft for five years and for three of those I was put in the 10% bucket. The worst was not to be singled out as the poorest employee. The worst was not that it was totally unfair, fundamentally wrong and without any proper motivation. The worst was the bullying that ensued. The managers had nothing that they could motivate it with, since there was nothing wrong with my performance, so they reached for every straw that they could find to try to motivate why I was the bottom performer. Besides pinning other peoples mistakes on me the most popular blame was to give me a really hard time when I did my job really well. Since I worked as a tester (SDET) this was really easy. Every time I found a really good bug (you know, the ones that companies like Google now give out cash rewards for) I got blamed for finding it too late and that it fundamentally was my fault that the bug was there in the first place.

      The absolutely biggest regret I have is hanging in there for so long. It is so utterly destructive on your motivation, confidence, happiness and competence to twice per year getting it on paper that you suck and being bullied in between. You can ignore it for a while but in the end it gets you deeper than you could imagine.

      One thing that is a bit surprising is that Google evaluate its employees four times per year compared to Microsoft's two. I wonder what consequences that will have...

  • by symbolset ( 646467 ) * on Wednesday July 04, 2012 @07:30PM (#40545685) Journal
    Your odds of surviving thirty years of this is approximately zero. Everybody has an off year eventually. Once people realize that, their commitment also goes to zero.
    • The thing is, the rankings actually have very little to do with performance. The opposite, more like it. If you're good, somebody above you feels theatened.

  • by hibiki_r ( 649814 ) on Wednesday July 04, 2012 @07:50PM (#40545849)

    When using a review system like this, few things are more valuable to a manager than some really terrible employees.

    Imagine I have 2 amazing developers in my team and 3 very good ones, and the ranking system is going to force me to give one a bad review: It will not only make that one very good developer mad, but sour things for the other two, that have to keep beating the poor sob I randomly chose as the one getting the bad review. However, what if I transfer one of my very good developers to a different team in exchange for a worthless chump? Give the chump nothing important to do, and then the rest of your team can continue unhindered and unafraid of getting an awful review just because they are associated with a competitive team.

    I used to work at a place like this. If a new hire was just way too good, he was moved to a different team that had lost a top performer, and team quality was kept relatively even: We had to protect the good developers we had. Any team that was too good just had to be split up, or they'd quit anyway.

  • by AntiBasic ( 83586 ) on Wednesday July 04, 2012 @10:16PM (#40546965)

    The military uses a system very close to this. The most common evals give are EP (Early Promote, the best), MP (Must Promote, the one nearly everyone gets) and P (Promotable). But as we're locked in contracts and it's quite hard to get fired, the number one thing commanding officers are graded upon is retention. So what happens when you've got a very high performer who makes it known he won't be reenlisting? He'll be given that MP or dreaded P. What happens to that fuckup who swears he loves the Navy and will reenlist? He gets that EP no matter what.

    Rather than being a system which rewards the most able, it only entrenches more anger and dissatisfaction with this false meritocracy.

  • by Harry in the Soup ( 1252788 ) on Wednesday July 04, 2012 @11:24PM (#40547421)
    I left a company in the UK becuase of this. I put together a team selected from the top IT professionals in the company and all of whom got top reviews and pay hikes. When I reviewed them 12 months later I gave them all top marks but the HR dept said I could only put 2 at the top, 6 in the middle and 2 at the bottom. They just could not see why this was wrong and said it was Company Policy...this was not an IT specific company btw. Anyway after a fuss I left and so did 7 of the others when they found out what was going on.
  • by beachdog ( 690633 ) on Thursday July 05, 2012 @05:17AM (#40549099) Journal

    Writing computer software and doing things in the computer business has a huge labour content. It has been really difficult (in the past) to figure out how long a software project would take. Projects have been repeatedly dumped because there have been volcanic explosions as new, startlingly cheap and stunningly attractive technologies have replaced the beautifully crafted heavy metal business machines and software of the last decades.

    Stack ranking is an ugly way to force employee turnover.

    So I propose what is going on at Microsoft is that Stack Ranking is Microsoft's way of forcing employee turnover. The business idea is "manage the company to reduce costs before the employee has a future interest or stake in the company".

    There is a theme of love-it/hate-it between American big businesses and American workers. Consider General Motors. In the late 1950's General Motors began paying a pretty good wage to it's unionized labour force. By the 1990's the result was a lot of automobile workers that needed their benefits (working on an assembly line is physically demanding, over 20 years) and an entire manufacturing and marketing structure that spiraled downward when gasoline prices went past what was it ... $2 dollars a gallon?

    The shifts in market are much faster in the computer software and hardware business. There is no union and no guarantee of continuing employment these days. So in this setting, labour is a commodity but what the labour produces is extremely difficult to measure. Into the fog of software and support Stack Ranking is not-unfair to the lucky 9/10 of the employees.

"The number of Unix installations has grown to 10, with more expected." -- The Unix Programmer's Manual, 2nd Edition, June, 1972