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July 06, 2005

The Silly Season

It's review time at Microsoft, so along come the annual complaints about the review system, and in particular "the curve".

Microsoft grades employees on a scale from 1.0 to 5.0, with 3.0 being "meets expectations". Only grades 2.5 through 4.5 are usually given, since 2.5 means "about to be fired" and 4.5 means "about to be promoted", so why bother rating someone outside of that range.

Although 3.0 is "meets expectations", Microsoft employees all have an unspoken goal of beating expectations, so in reality merely meeting expectations actually means not meeting them when you factor in the unspoken goal. Thus the expectation is that everyone will get at least a 3.5, and a 3.0 is considered a bad thing. Got that?

At some point a rule was established in every group of a certain size, about 1/3 of employees should be rated 3.0 or below, 1/3 should be rated at 3.5, and 1/3 should be rated 4.0 and above. In order to determine where the curve falls for a group, the managers hold a "ranking and rating" meeting where employees are stack ranked from top to bottom. As a result of this meeting, the rating that your immediate manager gives you may be adjusted as part of fitting your larger group to the curve.

This sets off a lot of predictable complaints about how unfair this is, in ways so obvious I won't bother listing them. What few seem to acknowledge is why the system is in place. Like most dumbass-at-first-glance-and-wouldn't-it-be-better-if-everyone-was-just-great-and/or-honest systems, it exists because the previous, simpler way--the one people are pining for--was abused by some people, in a way that punished the honest people for being honest. It's the same reason expense report rules get stricter, and vacations reporting gets stricter, and travel policies get stricter...some teams were promoting people like crazy and was that fair? With the curve, you force every team to limit their promotions and rewards.

Plus a grade is based on your level on the Microsoft ladder. So a level 62 producing a certain result might get a 4.5 and a level 65 producing the same result might get a 3.0. Thus, it's not pure dog-eat-dog competition for the same pie. It's...something more complicated.

Yes, this system is unfair to the team where everybody does a great job relative to their level. Right. Where is that team? I've never worked on it. When you survey people, something like 80% of them think they are above average. I guess if you believe that, then the Microsoft review system is patently unfair.

And it's the same everywhere. I actually had a section in my first book about ranking and rating (aka ranting and raking, as in ranting about how good your employees are and raking everybody else over the coals) and when my sister was proofreading the book she said that part was boring, because there was nothing unique to Microsoft about it. I guess you could tweak it a bit...maybe make it more like 1/4 who had to be 3.0 or below...and make half the review based on team goals...but basically I don't think this topic is worth writing about any more. So I'll stop.

Posted by AdamBa at July 6, 2005 09:35 PM

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I had read about this problem. I also think that there was a good proposal.

The teams should also be ranked.
If a team is lagging behind it will get low rating and more of its members will get low ratings.
If team is working better more people will get high rating and promotions.

There is sense if managers payment depends on their teams ranking.

Saying that current system is better than previous doesn't mean it cannot be improved.

Posted by: Ivan at July 7, 2005 03:02 AM

Good points, its probably worth mentioning that your ranking also heavily depends on how well your manager can market your accomplishments at the stack ranking meetings.
In other words, you could exceed your set goals but if your manager doesn't fight for your 4.0 then you may very well lose out on what you deserve.

Posted by: anonymous at July 7, 2005 05:53 PM

For people to know what the whole dirty issue is... http://minimsft.blogspot.com/2005/07/microsoft-stack-ranking-is-not-good.html

Posted by: Reader at July 10, 2005 05:25 PM