Microsoft Abandons Unpopular Employee Grading Scale

Looks like what we have here is the makings of a kinder, gentler Microsoft (MSFT).

The company has scrapped a long-standing but widely unpopular and divisive method of grading workers called “stack ranking,” in which managers were forced to review employees on a bell curve, irrespective of actual performance in some cases.

Doing away with the former method of employee reviews—which pitted highly rated employees against one another and discouraged teamwork–may be another sign of the major cultural overhaul the company has undertaken to promote more collaboration and cooperation, all on the eve of chief executive Steve Ballmer’s retirement sometime next year.

Microsoft’s executive vice president of human resources Lisa Brummel, in an internal memo to employees recounted in a Bloomberg report, said company managers no longer will have to rate workers on a set scale in which a pre-determined number received good, average and poor marks in what was supposed to be an even bell-curve type distribution.

Workers apparently have complained about the system for some time, insisting that rather than promoting teamwork and collaboration, instead it pitted them against one another and forced managers to post poor scores for some of their well-performing team members. Doing away with the competitive employee grading system is being viewed by the company as mapping to the new One Microsoft blueprint for greater cooperation among various product and platform teams.

“We have taken feedback from thousands of employees over the past few years, we have reviewed numerous external programs and practices and have sought to determine the best way to make sure our feedback mechanisms support our company goals and objectives,” Brummel wrote. “The changes we are making are important and necessary as we work to deliver innovation and value to customers through more connected engagement across the company.”

Under the new system, Microsoft now is evaluating employees on how well they collaborate with others, with managers able to review and compensate workers based on merit within the confines of their budgets, according to Brummel’s memo.

“Our new approach will make it easier for managers and leaders to allocate rewards in a manner that reflects the unique contributions of their employees and teams,” she wrote.

In a Vanity Fair article on Microsoft published last August, Kurt Eichenwald wrote about the stack ranking system: “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.”