Yahoo's Latest Hr Disaster: Ranking Workers On A Curve

[interestrateripoff]

http://www.businessweek.com/articles/2013-11-12/yahoos-latest-hr-disaster-ranking-workers-on-a-curve#r=rss

If Marissa Mayer is as good at identifying winning startups as she is at embracing contentious human resources practices, Yahoo! (YHOO) is going to be just fine. Several months after the great work-at-home kerfuffle of 2013, Yahoo employees were up in arms about a new policy that forces managers to rank employees on a bell curve, then fire those at the low end. According to AllThingsD, Marissa Mayer reportedly told Yahoo workers that the rankings weren’t mandatory, but many people disagree. The company hasn’t responded to a request for comment.

With its embrace of rankings, Yahoo has waded into the “third rail of human resource management.” Forcing managers to rank their employees along a bell curve was popularized in the 1980s (thanks, Jack Welch), but lately it has fallen out of favor. The Institute of Corporate Productivity says the number of companies using either a forced ranking system or some softer facsimile is down significantly from previous years. Companies performing well were less likely to be using forced ranking systems than those that weren’t. Just over 5 percent of high-performing companies used a forced ranking system in 2011, down from almost 20 percent two years earlier.

Basically, many people have lost faith that ranking employees works, and some research suggests that employee performance doesn’t follow a bell curve at all. Instead, most people are slightly worse than average (PDF), with a few superstars. And while a bit of pressure can motivate people, constantly pitting employees against one another is terrible for morale. In a company that is going through layoffs, this gets worse over time (PDF), wrote several MIT professors in a study of forced rankings in 2006. “As the company shrinks, the rigid distribution of the bell-curve forces managers to label a high performer as a mediocre. A high performer, unmotivated by such artificial demotion, behaves like a mediocre.”

Didn't Enron do something similar? I can't remember how that turned out overall for the company, but weren't the CEO / Directors ultimately a bit 5h1t luckily I'm sure they didn't get ranked.

[richc]

Marissa Mayer's biggest claim to fame is that she dated Larry Page. What else would you expect?

[fluffy666]

Having had experience of such systems, I can safely say that they have a catastrophic effect..

In the UK, of course, you can't just randomly fire people because they came bottom of this exercise. This creates a hilarious incentive - people who perform badly end up being given a payoff to leave.. and since this is inevitably a 'leave immediately, don't work your notice' situation, you have 'vanishings'.

Apart from that, the second problem is that performance reviews are extremely subjective. There ends up being considerable scope for politicking. With people's jobs at stake this can get genuinely heated.

There is also the problem that as morale is hit (and a bell curve system is not a sign of a happy, functional workplace), those at the top end leave. If you've also been getting rid of the low performers, then you'll just have shrunk the distribution to the point where you end up firing people at random, because everyone is performing in a similar manner.

Note that there is no a priori reason to expect employee performance to lie on a bell curve, the whole premise is made up. But that's a minor issue when it comes to management fads..

[Damik]

http://www.businessw...n-a-curve#r=rss

Didn't Enron do something similar? I can't remember how that turned out overall for the company, but weren't the CEO / Directors ultimately a bit 5h1t luckily I'm sure they didn't get ranked.

does not Accenture do that ???

[Damik]

Having had experience of such systems, I can safely say that they have a catastrophic effect..

In the UK, of course, you can't just randomly fire people because they came bottom of this exercise. This creates a hilarious incentive - people who perform badly end up being given a payoff to leave.. and since this is inevitably a 'leave immediately, don't work your notice' situation, you have 'vanishings'.

Apart from that, the second problem is that performance reviews are extremely subjective. There ends up being considerable scope for politicking. With people's jobs at stake this can get genuinely heated.

There is also the problem that as morale is hit (and a bell curve system is not a sign of a happy, functional workplace), those at the top end leave. If you've also been getting rid of the low performers, then you'll just have shrunk the distribution to the point where you end up firing people at random, because everyone is performing in a similar manner.

Note that there is no a priori reason to expect employee performance to lie on a bell curve, the whole premise is made up. But that's a minor issue when it comes to management fads..

this is a common policy for sales people or e.g. brokers. but this is OK as nobody likes them anyway ..

[Bloo Loo]

Extremists everywhere rank their belief, and the beliefs of others on the Bell curve, where the middle is the devout.

deviate left and right and the extremist sees people far off the ideal as enemies that must be disposed of...they get rid of these and et voila, a new enemy emerges...carries on until there is only one left...

How does the Bell curve work for the disabled?

[billybong]

Basically, many people have lost faith that ranking employees works, and some research suggests that employee performance doesn’t follow a bell curve at all. Instead, most people are slightly worse than average (PDF), with a few superstars.

And it's a fair bet that it's the "superstars" doing the ranking.

It sounds more like a control thing rather than a performance thing. Like a lot of other management "techniques" pretending to be for performance but are really for control.

It also seems to be related to pay as part of the negotiation system.

Edited November 15, 2013 by billybong

[Snafu]

I get ranked every year. If I rank poorly two years in a row I'm quite likely to be managed out or get offered one of the redundancy packs.

Keeps you on your toes....

[Dorkins]

Note that there is no a priori reason to expect employee performance to lie on a bell curve

There's also no reason to expect employee performance to be solely down to factors internal to the employee him/herself. There are many external reasons why an employee might not be performing well such as inadequate resourcing or having an impossible job description. It suits management to maintain the fiction that all performance problems are due to lack of moral fibre of individual employees rather than poor structuring of the organisation.

[MarkG]

I get ranked every year. If I rank poorly two years in a row I'm quite likely to be managed out or get offered one of the redundancy packs.

Ranking across a company isn't such a bad idea. The problem is when the company tell each manager to rank their own staff, so even if everyone in that department is well above average, the ones at the bottom are ranked as low as the worst in the company.

This is probably one reason Windows 8 was a disaster; Microsoft have apparently been doing this for years.

[motch]

There's also no reason to expect employee performance to be solely down to factors internal to the employee him/herself. There are many external reasons why an employee might not be performing well such as inadequate resourcing or having an impossible job description. It suits management to maintain the fiction that all performance problems are due to lack of moral fibre of individual employees rather than poor structuring of the organisation.

I know a chippie who worked at a new place some years ago, he was asked to make a gate in the workshop, of which he had made a few of previously, which he did, the foreman guy then told him near the end he was making the wrong type of gate (the foreman guy knew all along). ....Lets hope this foreman guy doesn't do the rankings....

[davidg]

Previous company I worked for put everyone's age on a bell curve then fired everyone in the upper quartile who hadn't made it to manager grade (apart from the HR staffers of course, who were immune).

[MrPin]

I get ranked every year. If I rank poorly two years in a row I'm quite likely to be managed out or get offered one of the redundancy packs.

Keeps you on your toes....

Encourages you to find other employment more like!

[SHERWICK]

does not Accenture do that ???

Yes. And many other Consulting firms too.

[Tin Foil Hat]

I worked for an American software company c e r n e r who are extremely litigious and did exactly this. In my personal experience the ranking was completely arbitrary and opinion based which meant in reality the inner clique got the top ratings and others didn't. It was rumoured that it was also a method whereby sacking older and more expensive resources could be justified and then they got replaced by cheap newbies.

It was utter toss and I smile but feel sorry for those working there all scrabbling to kiss butt and keep themselves out of the bottom 10%.

Edited November 15, 2013 by Tin Foil Hat

[MrPin]

And it's a fair bet that it's the "superstars" doing the ranking.

It sounds more like a control thing rather than a performance thing. Like a lot of other management "techniques" pretending to be for performance but are really for control.

It also seems to be related to pay as part of the negotiation system.

It's a better experience to work for a smaller company, where you can get to talk to the MD every day, and he sees what you do! He, or maybe she, will be seeing what you do to improve the business process, save money, and not get caught up in B***sh!t! In a big company nobody can see you not working hard!

[erat_forte]

Where on the bell curve did Marissa Mayer place?

[thecrashingisles]

Where on the bell curve did Marissa Mayer place?

At the bell end.

[davidg]

Where on the bell curve did Marissa Mayer place?

No idea but personally I would do her. Although I imagine she is a psychopathic ball breaking corporate nutjob.

Edited November 15, 2013 by davidg

[ChumpusRex]

I've come across this in my field of healthcare, often suggested by a manager, or a management consultant who hasn't actually tried it. There is a reason why this sort of management has been abandoned in high-risk industries, such as nuclear, aerospace, etc.

Certainly in the medical field there have been lots of scientific papers and articles written about how to deal with incompetent staff, or staff who are thought to be failing.

The traditional thought is to place them along a bell curve, and "cut off the tail" by sacking or retraining those at the bottom end. A couple of people have recently done a survey of this approach, contacting the authors of all the articles offering these guidelines and work practices. Their results were very interesting. Typically the response to the enquiry of "how well are your guidelines working in your hospital?" was one of three options:

A. No reply

B. We never actually implemented them. We just drew them up as a box-ticking exercise.

C. The service has completely imploded. We sacked a few incompetents. Shortly after that, people got scared. They became hyper-cautious and productivity collapsed. If someone made a mistake, the best thing to do was cover it up, instead of attempt to correct it as that would leave a paper trail. The best staff resigned and took another job elsewhere. The ones in the middle went off sick with stress due to overwork so all the work is now being done by agency staff.

There was not one single reply back that stated that this type of guideline was in place and working.

The other problem, aside from the fact that "fear is toxic" is the fact that people don't lie on a bell curve, and even if they did, a bell curve has "thin tails", and cutting off the tail buys you very little. It's expensive to sack someone and hire and retrain someone else. A much better solution is to find out why the best staff are better and try to educate everyone to do the same.

There's also no reason to expect employee performance to be solely down to factors internal to the employee him/herself. There are many external reasons why an employee might not be performing well such as inadequate resourcing or having an impossible job description. It suits management to maintain the fiction that all performance problems are due to lack of moral fibre of individual employees rather than poor structuring of the organisation.

This needs repeating, as it is so important.

Continuing the information from my field, It's also one of the important conclusions of the report into the North Staffs NHS scandal into poor care; it wasn't necessarily only bad staff delivering bad care, rather bad management that had resulted in competent staff having an impossible job.

[Snafu]

Ranking across a company isn't such a bad idea. The problem is when the company tell each manager to rank their own staff, so even if everyone in that department is well above average, the ones at the bottom are ranked as low as the worst in the company.

This is probably one reason Windows 8 was a disaster; Microsoft have apparently been doing this for years.

This is what we have in essence. Typical US way of dealing with staff. You could have 100 decent people on a curve but 10 would still have to go, as each employee is fielded against eachother as competition basically.

[MrPin]

I worked for an American software company c e r n e r who are extremely litigious and did exactly this. In my personal experience the ranking was completely arbitrary and opinion based which meant in reality the inner clique got the top ratings and others didn't. It was rumoured that it was also a method whereby sacking older and more expensive resources could be justified and then they got replaced by cheap newbies.

It was utter toss and I smile but feel sorry for those working there all scrabbling to kiss butt and keep themselves out of the bottom 10%.

I worked for an Americano company, and had the same experience. I told them to "shove it", and left!

[stormymonday_2011]

Managerial primitivism based on pseudo science and the abuse of Gaussian mathematics

I saw a program on TV recently about an ancient civilisation based in the foothils of the Peruvian Andes where a tiny elite lived in God like status at the top of pyramids built by the toiling peasantry who lived around them. The ruling families status was based on their supposed ability to communicate with the Gods and to ensure the rains came so there was a bountiful harvest of food. When the climate changed and drought afflicted the area the rulers took first to sacrificing animals and then humans in attempt to appease the angry Gods. Ultimately as harvest after harvest failed the society collapsed and the people tore down the pyramids and their rulers before dispersing to live in less hierarchical and more simple societies

Thinking about it afterwards it struck me that there were a lot of similarities with our own supposedly sophisticated society which is increasingly run by small groups who do not really understand how much of the technology around them works. This classes sole job is to make sure that the treasure appears at the end of each year in the form of bonuses and other financial rewards. In order to achieve that end they also indulge in annual rounds of pointless human sacrifice in the belief to ensure the money keeps coming. Like the ancient Peruvians before them they will persist in this activity right up until the time their society collapses.

Sadly this type of mumbo jumbo is widely used even in supposedly sophisticated technical companies such as IT firms. There is a widespread belief that regularly slaughtering a few staff and putting in place ever more complex and arcane processes and procedures is the way to success. It is as if we have surrendered our rational minds to the belief that if we can just get the incantations and rituals right then the fickle deities of business will smile on us. It wont be long before managerial books are recommending checking chicken entrails for bad omens before making any decisions or deciding on who to hire and who to fire.

Edited November 15, 2013 by stormymonday_2011

[Si1]

I worked for an American software company c e r n e r who are extremely litigious and did exactly this. In my personal experience the ranking was completely arbitrary and opinion based which meant in reality the inner clique got the top ratings and others didn't. It was rumoured that it was also a method whereby sacking older and more expensive resources could be justified and then they got replaced by cheap newbies.

It was utter toss and I smile but feel sorry for those working there all scrabbling to kiss butt and keep themselves out of the bottom 10%.

I did rather wonder what the criteria are

So presumably inoffensive mediocrity is the best option, with butt kissing thrown in

[Si1]

Sadly this type of mumbo jumbo is widely used even in supposedly sophisticated technical companies such as IT firms. There is a widespread belief that regularly slaughtering a few staff and putting in place ever more complex and arcane processes and procedures is the way to success. It is as if we have surrendered our rational minds to the belief that if we can just get the incantations and rituals right then the fickle deities of business will smile on us. It wont be long before managerial books are recommending checking chicken entrails for bad omens before making any decisions or deciding on who to hire and who to fire.

Yes - "no-one ever got sacked for buying IBM"

People seek certainty even where it is impossible

So they tolerate people and ideas that claim to have the answers.

In other words, sacking those perceived as ill performers satisfies investors, lenders, sub contractors etc etc. It matters not that at a modest level of sophistication it is nonsense, what matters is that at base level it is considered sensible, so in the event of failure those at the top will not be blamed, or at least they'll survive long enough to claim their generous pension.