On Stack Rankings

Given the amount of research into human motivation and the distinction between intrinsic and extrinsic rewards, not to mention the importance of Whole-Team Approach in the work we do, I am disinclined to use extrinsic rewards to motivate people. Rather, I prefer to pay everyone enough to take pay off the table as a concern and have everyone in the team share equitably in whatever bonus is available. That is, unless some extreme circumstances apply, I will aim to not differentiate individual performance with bonus money and will instead allow bonuses to be calculated simply by the employee’s bonus target and the organization’s bonus funding. Our team morale matters more to me than attempting to motivate people (again, unproven) through manipulating bonuses. Instead, the value of our contributions is differentiated by our respective salaries/base compensation.

The practice of rewarding internal competition over collaboration is incompatible with the whole-team approach, trust, collaboration and respect that is necessary for agility to thrive.

Problems with Stack Ranking (from Lattice)

  • It hinders innovation and teamwork.
  • It leads to high turnover, which can be costly.
  • It promotes a toxic company culture.

Companies that have stopped stack ranking

Quotes

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review. It leads to employees focusing on competing with each other rather than competing with other companies.”” — former Microsoft employee

“[stack ranking was fine] for evaluating performance in a sales organization, where managers may want to heighten competition .… It’s less well suited for evaluating engineers, among whom management may want to create closer collaboration.” — Ryan Smith (former CEO of Qualtrics)

“Employees perform better when they receive continuous, real-time feedback rather than punitive feedback once a year.” — Dave Carhart, vice president, advisory services at Lattice

Sources and Resources