Sent: September 17, 8:00 a.m.
From: Curt, Founder & CEO
To: Tom, Director of HR Subject: Annual Stack Rank
I heard the management team went through the first phase of stack ranking last week. I would have liked to participate, but I am sure the team did a great job. I want to make sure you get Stephanie M. in the top 10 percent of the stack rank. She’s amazing. She’s on the product development team, right? She’s got a great presence in the office and always seems to be on top of her game—a real star in the making. She seems enormously popular with the rest of the staff too.
I heard that she was heading up a couple of social groups in the office as well—that’s the team spirit! Make sure she gets a 20 percent pay raise, and I’ll make sure I reach out to her and schedule a time for a 1:1 lunch to show my appreciation for her contributions.
I’ve also got my eye on Jody. Where did you snag her? She sure knows how to work a room. “Large and in charge,” if you get my drift. Let’s make sure we don’t lose her to the competition; I like her style. Put her in the top 20 percent and give her a 10 percent raise. She’s new, so let’s keep her hungry and wanting more—I know I do.
Take a lesson from Curt, Founder, and CEO of “Oh, look at that woman over there”:
A most favored event by those at the very tippy-top who want to assert their power over the people and see their shining stars get the recognition they don’t deserve is stack ranking, which is a method by which a leadership team takes an entire staff and puts them in order according to their “value” to the company. Once in order, you take some random percentage at the top, middle, and bottom and award pay raises and bonuses for that group. It’s as flexible as you want it to be, and easy to defend because it’s entirely subjective and not based on any kind of pesky performance data.
The most important thing about stack ranking is that it remains on complete secrecy lock-down. No one other than the leadership team can ever see the results of the stack ranking, nor can they ever find out about the hilarity that ensues when you go through the process as you gossip about each and every employee in the company. You should find a trustworthy admin to take notes during your stack-ranking session and make sure she is ranked near the top so that she’s not tempted to leak the results.
Stack ranking is a great way to penalize employees or “manage them out” for things that are totally unjustifiable otherwise, such as being overweight, ugly, or too shy, or having once cooked fish in the microwave. But make no mistake, no matter how good a job you do to hide the results of your stack-ranking process, your employees all know that you stack rank—so you can count on some pretty interesting behavior from people who are hell-bent on what-ever-ing their way to the top of the list!
From: Tom, Director of HR
To: Jaime, Director of Product Development
Subject: Annual Stack Rank
Did you approve this pay raise and stack-rank positioning for Stephanie? If not, I thought you should know that Curt has mandated that she receive a 20 percent pay raise next year. Good luck managing her performance.
As a reminder, she’s been with the company for three weeks and her probation period doesn’t end until August. Curt knows this, but he wants this raise to happen anyway for some reason.
LET’S GET REAL
In case it isn’t abundantly clear in other chapters, we think stack ranking is one of the worst employee-management practices ever invented and should be avoided at all costs. It is worthwhile, in fact, to ask if a company you are considering joining does stack ranking as a regular practice, and if so, include it in your decision criteria for accepting a new leadership position.
Stack ranking is nothing more than a popularity contest, especially when done by an ownership/leadership team that is largely disconnected from the mainstream workforce. It gives rise to the loudest and most notable employees and overlooks the quiet contributor. It is a methodology that creates a breeding ground for discrimination, sexism, and favoritism, and it is an open invitation for legal action.
What’s worse is that stack ranking, like grading on a curve (discussed in the previous section), assumes that you can only have a subset of top performers. It assumes that in any organization there is a top, middle, and lower level of performance. If you wouldn’t assemble a sports team or a military troop based on this kind of thinking, then don’t hire, or manage with it in your company!
Simply put nothing good comes from stack ranking. It’s demoralizing for your employees, it causes unhealthy competition based on favoritism, and it’s bad for developing leaders. Leaders and managers must be taught to evaluate performance on an individual basis as aligned to job requirements, then at the team or group level as aligned to team requirements, then— more holistically—as aligned to company strategy. Peer-to-peer stack ranking takes none of these things into consideration.
But, as in our story above, the real damage is done by the combination of the stack-ranking process and the person at the top who uses it to create their harem of sycophants and/or personal favorites. That leader is subverting the authority and protocol of the organizational chart by making staff management decisions above or around direct managers. If you have a senior leader who is resisting giving up stack ranking, take a good look around them and see if they’ve created a “court” of favored individuals.
In short: banish stack ranking forever and consider banishing anyone who sings its praises.