The Dangers of Stack Ranking in Tech Companies Explained
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Chapter 1: Understanding Stack Ranking
Stack ranking is a significant issue within the tech industry. This approach assumes that a team cannot be composed entirely of high performers, compelling managers to identify underachievers, even when none exist. Unfortunately, this method continues to persist in many tech firms today, where it is employed to evaluate personnel and determine who “deserves” recognition. Rather than engaging in meaningful conversations and assessing genuine talent, it is often simpler for companies to apply a flawed ranking system, indicative of a deeper issue of complacency.
Here is the account of why The Secret Developer felt so strongly about stack ranking that they decided to leave a lucrative position.
A personal anecdote highlights the drawbacks of stack ranking in the workplace.
Section 1.1: A Naive Start
Several years ago, I found myself in a mid-level engineering role. At that time, I lacked negotiation skills and believed that being a competent mid-level engineer was preferable to striving for a senior position. In fact, I even attempted to negotiate my salary on the lower end of the scale, hoping to manage expectations.
Don't make this mistake; it was incredibly naive.
Subsection 1.1.1: Skill Development
As time passed, I honed my abilities. In a tech environment, this meant that after three months, I was producing work comparable to that of senior developers.
Success, right?
I expected positive outcomes during performance reviews—perhaps a raise or even a promotion.
Not quite.
Section 1.2: Company Expansion Challenges
The organization was in need of additional personnel. Given the scarcity of skilled software developers, the hiring process took time. I interviewed candidates for positions equivalent to mine and felt confident, as many were underwhelming.
However, there was one older candidate who seemed to be favored, likely due to his amiable nature. His coding skills? A bit hasty with some basic errors. Nevertheless, because he had been in the same role for a decade, this was somewhat understandable.
Everyone deserves a chance to improve.
Despite this, he was brought on board as a Senior Developer.
We were compelled to accept him as senior due to his ten years of experience, and we also hired several mid-level engineers.
Section 1.3: The Stack Ranking Review Process
Annual reviews were conducted through stack ranking. This method involves a bell curve distribution: designating 10% for low performers, 75% for average, and 15% for high performers. New hires are excluded from this evaluation, allowing them time to acclimate to the company.
We had recently terminated an underperforming employee, which complicated matters. We couldn't rate our new senior as anything less than a great performer since he was well-liked, leaving me categorized as merely adequate, despite having taken on senior-level responsibilities.
The possibility of promotion had vanished with the addition of the new senior developer, and I received no pay increase.
Chapter 2: Seeking Better Opportunities
In the tech industry, spending twelve months at a job is not frowned upon. The solution? I transitioned to a new firm that offered a 30% salary increase along with improved working conditions.
Section 2.1: The Cost of Stack Ranking
The developers I worked alongside remained stagnant in their roles, receiving neither promotions nor new opportunities, simply maintaining their positions.
Would I have left regardless? Perhaps.
While some may perceive me as arrogant or inexperienced, I can assure you that my annual review was exceptional and reflected my strong performance. Unfortunately, my compensation and recognition did not align with my contributions.
I realized that it was more efficient to seek out a position that valued my skills rather than waiting for the flawed stack ranking system to recognize my worth.
Isn't that a troubling thought?
Section 2.2: The Origins of Stack Ranking
The concept of stack ranking originated with Jack Welch, the renowned CEO of GE, who aimed to eliminate low performers from the large and cumbersome workforce of the previous century. This method involves ranking employees and dismissing the bottom 10%, akin to arranging a class of students by height and eliminating the shortest to raise the average.
While this approach is easy to implement, it is fundamentally flawed and harmful.
It's crucial to understand that stack ranking can be rigidly applied, which means that the numbers must balance at a team level. I've witnessed this in small teams of just three members, demonstrating the absurdity of such a system.
Section 2.3: Final Thoughts
Stack ranking is not only ineffective but damaging to workplace morale.
About The Author
The Secret Developer is a seasoned software developer who shares insights on Twitter @TheSDeveloper and regularly contributes articles on Medium.com.
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