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Stacked Ranking
The title of this post sounds like the stodgy name of some inhumane, BS, corpo process under which “supervisors” evaluate their children, I mean, induhvidual contributors. But wait! It’s the Valve way.
You don’t know who Valve is? Valve is a company that creates massive, multi-player, online games. According to “economist-in-residence“, Yanis Varoufakis, Valve rakes in $1B in revenue even though they have a measly 300 employees. Also, according to Yanis (and their employee handbook), they are totally flat chested. There’s not a single boob, oops, I mean “boss“, in the entire community. D’oh!
The employee handbook spells out the details of the “Stacked Ranking” process, but in summary, peers rate each other once a year according to these four, equally-weighted metrics:
Skill Level/Technical Ability
Productivity/Output
Group Contribution
Product Contribution
Notice that there’s no long list of patriarchical, corpo-BS ditties like these in the four simple Valve metrics:
- Takes initiative and is a self-starter
- Knows how to acquire resources when needed
- Manages time well
- Knows how to prioritize tasks
- Yada, yada, yada
As you might guess, the stack rankings are used for salary adjustment:
…stack ranking is done in order to gain insight into who’s providing the most value at the company and to thereby adjust each person’s compensation to be commensurate with his or her actual value. Valve pays people very well compared to industry norms. Our profitability per employee is higher than that of Google or Amazon or Microsoft, and we believe strongly that the right thing to do in that case is to put a maximum amount of money back into each employee’s pocket. Valve does not win if you’re paid less than the value you create. Over time, compensation gets adjusted to fit an employee’s internal peer-driven valuation. – The Valve Employee Handbook
Whenever I serendipitously discover jewels in the rough like Valve, SAS Institute, HCL Technologies, Semco, Zappos.com, etc, I always ask myself why they’re rare exceptions to the herd of standard, cookie-cutter corpricracies that dominate the business world. The best answer I can conjure up is this Ackoff-ism:
The only thing harder than starting something new is stopping something old. – Russ Ackoff
But it’s prolly something more pragmatic than that. Since corpo profits seem to keep rising, there is no burning need to change anything, let alone blow up the org and re-design it from scratch to be both socially and financially successful. That would be like asking the king to willingly give up the keys to his kingdom.
A Big Fat Waste Of Time
Having recently finished the above two heretical books on the undiscussable joke that is “the Annual Performance Review“, I coincidentally stumbled upon this recent FastCompany.com article: “Why Year-End Reviews Are A Big Fat Waste Of Time”.
Alas, even though author Denis Wilson plants some decent advice for managers in the blarticle, it still reeks of a slight “tweak” to the notoriously bad, but eerily unopposed, APR practice.
After posting the link to the blarticle on Twitter, I had this interesting exchange with Adam Yuret:
Upon reflection on why such a horrendously demeaning practice like the APR still exists in the 21st century, BD00 has come to the conclusion that the guild of management collectively thinks:
- The APR actually “works” or,
- They know it doesn’t work but they have no motivation to attempt such a big and scary change to the org, or
- They know it doesn’t work but they have no motivation to explore alternatives for achieving what the APR is actually supposed to do.
Preposterously Unacceptable
Unless they’re cosmetic tweaks, all proposed alternatives to the unassailable and revered Annual Performance Review (APR) will always be auto-stamped as preposterously unacceptable by the powers that be. It has to be that way, cuz expecting the wolf who’s guarding the hen house to voluntarily give up his post is a slam dunk losing proposition. Nevertheless, let’s look at one of these preposterously unacceptable alternatives just for fun.
Sam Culbert, in “Get Rid Of The Performance Review“, proposes deep-sixing the laughable APR ritual and replacing the stinker with the (crappily named) “performance preview” (PP). The first major feature of the PP is that salary actions are severed from the process. They’re independently determined according to a more objective set of criteria (perhaps like how Joel Spolsky does it at Fog Creek Software). Removing the salary sledgehammer from the hand of the formerly omnipotent manager increases the chance that a straight-talking, two-way conversation regarding individual and organizational improvement will occur.
Mr. Culbert’s face-to-face PP, which can be called into being whenever either side “feels” it should happen, is predicated on both sides answering simple questions like these:
- What have I been doing recently that helps you and the organization perform better?
- What have I been doing recently that isn’t working for you and the organization?
- What can I do in the near future to help you and the organization improve?
Notice that thesw are questions to be answered by both sides – as opposed to one way, judgmental assertions made by the boss “on behalf of the borg” to the subordinate. There are also no formal forms or checklists to be signed and squirreled away in Hoover files to be brandished later for compliance coercion.
This blog post barely scratches the surface of Mr. Culbert’s PP process, but hopefully it’ll spur you to buy his book and learn more about this HR anti-christ. On second thought, don’t do it. If you’re a DICkster, it might bum you out since you’ll vividly realize that you’re helpless and you can’t “fight city hall“. If you’re in the hallowed guild of management (especially the unconsciously evil HR echelon), because of its preposterous unacceptability, it might send shivers up your spine and/or piss you off.
Note: Instead of “Performance Preview” (PP), BD00 would’ve called it something like “I Help, You Help” (IHYH).
Be Thankful
In “Abolishing Performance Appraisals“, Coens and Jenkins state:
One study found that 98% of people saw themselves in the top half of all performers. Another study showed that 80% of people saw themselves in the top quarter of all performers. Other research indicates that 59% of workers across a variety of jobs disagreed or strongly disagreed with any rating that was not the highest on the scale.
Now, assume that your in-Human Resources (iHR) department, under the condoning eyes of the C-suite, enforces the standard bell curve rating system on the DICforce to keep operating costs in check and to implement the industry’s most sacred “best practice“. Of course, the ratings are doled out at the beloved Annual Performance Review (APR) ritual along with subjective lists of personal faults that need “improvement” and 2% raises – a brilliant triple punch combo to the psyche. To make things more interesting, assume that all the reviews are given at the same time each year.
Given the information above, the cyclical morale curve below was scientifically developed by BD00 using one of his patented social system algorithms.
The curve shows that the average “system-wide” morale peaks just prior to the APR; and then it takes a nose dive after most of those optimistic DICs get a dose of reality from their supervisors (whose morale also takes a nose dive from being forced by iHR to administer the deflating news). Subsequent to the nadir, the system morale slowly recovers and rises back to its peak – until boom, the next iHR sponsored APR takes place. Whoo hoo! Dontcha just luv rollercoaster rides?
Just think of the lost productivity and sub-quality work performed during the annual dips. The next time you see an iHR group member, don’t fugget to thank him/her for the wonderful APR system his/her group presides over. Uh, on second thought, don’t do it. Nothing of substance is likely to change and you may be perceived as difficult, disrespectful, and disloyal – three more items to tack onto next year’s personal fault list. Plus, these types of things are undiscussable and they’re not within your tiny silo of expertise.
It’s The Relationships, Stupid
If you read Sam Culbert’s book rant against the taken-for-granted and unassailable “annual performance review” process, you’d think he is an anti-hierarchy revolutionary deserving to be crushed. But the dude is not:
Hierarchical structure, in the form of an organization chart, serves many constructive purposes. By showing the chain of command, it allows everyone to see who is responsible for what, how organization units are being deployed, and, most importantly, who should be accountable for bottom-line results. In contrast, I can’t think of a single constructive purpose served by hierarchical relationships— that is, those in which the boss gets to dominate all conversations.
Culbert, Samuel A. (2010-04-01). Get Rid of the Performance Review!: How Companies Can Stop Intimidating, Start Managing–and Focus on What Really Matters (Business Plus) (pp. 128-129). Hachette Book Group. Kindle Edition. – Sam Culbert
In a man-made conceptual hierarchical breakdown of a tree’s “parts“, the relationships between the parts have nothing to do whatsoever with their “position” in the hierarchy. A tree’s components miraculously work together in synchronous harmony to manifest and share its beauty as a whole with all of nature – including us (perhaps undeserving) humans. Leaves aren’t pitted against leaves for the purpose of gaining more hierarchical status in the “minds” of the other tree parts. The trunk doesn’t perceive itself as “more important and deserving” than the “lowly” branches. The roots don’t talk about the topmost branches in a derogatory manner, nor vice versa.
Related articles
- He Said, He Thought, He Said, He Thought (bulldozer00.com)
Industry Best Practice
When we got the idea for this book, we expected to surely find dozens of other books with the same theme… To our surprise, however, we found no other books devoted to abolishing (the annual performance) appraisal and exploring fresh approaches to the functions of appraisal. – Coens/Jenkins (Abolishing Performance Appraisals)
Since the thought of replacing the sacred “annual performance review” is so shockingly unthinkable, any proposed alternative doesn’t have a snowball’s chance in hell of being embraced. The undiscussability of this “industry best practice” is so palpable, that not many souls even make an attempt to concoct any alternatives, let alone expose them for scrutiny. Alas, such is the power of entrenched 20th century management thinking to keep the status quo on corpo-social issues that really matter, in-situ.
Related articles
- Behind One’s Back (bulldozer00.com)
- He Said, He Thought, He Said, He Thought (bulldozer00.com)
He Said, He Thought, He Said, He Thought
In “Get Rid of the Performance Review!: How Companies Can Stop Intimidating, Start Managing–and Focus on What Really Matters“, Sam Culbert provides several, made-up, boss-subordinate exchanges to make his case for jettisoning the archaic, 1900’s “annual performance review“. For your reading pleasure, I lifted one of these depressingly funny exchanges out of the book and transformed it into a derivation of Chris Argyris’s terrific LHS-RHS format. It’s long, and it took me a bazillion years to recreate it on this stupid-arse blawg; so please read the freakin’ thing.
Did you notice how both the boss and the subordinate suffered from the ordeal? But of course, you don’t have to worry about experiencing similar torture because the “annual performance review” at your institution is different. Even better, your org has moved into the 21st century by implementing an alternative, more equitable and civilized way of gauging performance and giving raises.
In his hard-hitting and straight-talking book, Mr. Culbert, a UCLA management school professor and industry consultant firebrand (he’s got street cred!), really skewers C-level management. He fires his most devastating salvos at evil HR departments for sustaining the “annual performance review” disaster that sucks the motivation out of everybody within reach. And yes, he does provide viable alternatives (that won’t ever be implemented in established, status-quo-loving borgs) to HR’s beloved “annual performance review“. Buy and read the book to find out what they are.
Note: Thanks Elisabeth, for steering me toward Mr. Culbert’s blasphemous work. It has helped to reinforce my entrenched UCB and the self-righteous illusion that “I’m 100% right“. But wait! I’m not allowed to be right.
Instantaneous Feedback
Alfie Kohn wrote a whole book on the subject. So, what subject…. you ask? Why, it’s the subject of the “venerable” yearly performance review created in the bygone era of the early 1900s. Specifically, Alfie’s book conscientiously provides details on how to get rid of what Dan Pink describes as the “highly stylized ritual in which people recite predictable lines in a formulaic way and hope the experience ends very quickly“.
In case you don’t want to, or are afraid to read Alfie’s heretical tome for fear of tossing a grenade at your existing mental model, Mr. Pink gives the subject some treatment as point number 12 in his FLIP Manifesto: “Scrap performance reviews”.
Dan gives not only 1, but 3 ideas for drop kicking the yearly performance review out of the borg and into its rightful place in obscurity. My fave is number 2:
I know, I know. Abolishing the yearly performance review can’t possibly work in your borg. Your business and industry are “different“. It is the way it is because it is the way it has always been and it is the way it has to be. Case closed.
My Accomplishments
Here’s an idea. The next time you’re being formally evaluated for performance by a “superior” and he/she opines that your written accomplishments are vague, ask him/her for a copy of his/her latest accomplishments sheet – for guidance on how to do it right, of course.
Note: Thanks to Fish-dude for finding the matching Dilbert strip.
Esther Tweets
I’m passionate about all aspects of software development, including, uh, project management (I really am). Since Esther Derby is an insightful and pragmatic thinker filled with valuable tips, techniques, and methods for successfully executing hairball software projects, I follow her on Twitter. Check out this trio of sequential tweets.
My answer to Esther’s last question is: “It would be great!“. Alas, most managers don’t, or aren’t allowed to, think in terms of systems. Systems thinking isn’t valued in siloed, CCH corpricracies, so managers have no incentive to learn or apply it’s principles and techniques for continuous improvement. In really badly run orgs, it’s too dangerous for one’s career to think or act horizontally in silo-city. It’s too bad, because orgs of people are richly interactive dynamic systems of systems that require constant shepherding to keep every person and every group and every unit aligned and connected.
Why am I here?
WTF?
Meh!
D'oh!
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