Stack Ranking - The Only Word That I Don't Like in English

Many companies which have stack ranking follow something similar.

Every year, they identify top 20%, middle 70% and bottom 10%. Those whoever are in top 20% would be given incentives, raises and promotions. Those whoever in bottom 10% either let go or they would be treated in such a way that, they themselves would leave.

Let's suppose, if you hire the 10 most brilliant people in the world, still, there would be one person in the bottom 10%, and that person would be asked to leave, eventhough, they cannot replace that person with anybody else in the world.

One should check, whether their employee is performing better than their expectations based on the position and pay etc. But, not, relative to others. If the company has the most dumb 10 people of the world, and still, if they give promotions to the top 20%, then it cannot survive in long run.

This policy would work only, if the company hires 10% of dumb people every year, so that, their main talent will never be in bottom 10%. But, if they hire equally talented people, then their main talent may leave.

In most of the companies, if the employee is on bench or in insignificant project, then most of the time, they would be in bottom 10%, unless, he/she has very good manager. Because, there won't be anything for them to show in the performance review.

In case of relative ranking, the employee has to prove that, he/she is better than his/her colleague. Many times, it would lead to unfriendly environment. It is not easy to see that, but, the project would be effected severely by that. For example, two employees are seriously discussing on the approach to follow, and both are giving pros of their approach and cons of the other person's approach. This looks like a healthy discussion for many managers. But, if one checks little deep, probably, that discussion itself may be useless. Both might be trying to prove that, they have better design than the other. Probably, if there had been no need to prove anything, then that discussion itself may not take place.

The companies that are too big with lot of cash thinks that, this process is working very well for a long time. For big companies which have lot of cash, even if they do 100 mistakes, but, if they do one thing correctly, it can survive without any issues. If the same thing is done by a startup, it would die immediately.

If your organization has stack ranking, don't expect any employee who does not care about recognition, to work with you for a long time.