If you have ever worked in a corporate environment, you may have heard the term "stack ranking." In this blog post, we will discuss what stack ranking is and the pros and cons of using this system in the workplace.
What is stack ranking?
Stack ranking is a system in which employees are ranked against each other. The rankings can be based on performance, or they can be used to decide who gets promoted or fired. Stack ranking is a controversial management method when it comes to employee performance. It can create a competitive environment in which employees are motivated to outperform their colleagues. It can also help managers identify high-performing employees and ensure that they are rewarded for their efforts. The downside to all this, however, is that stack ranking can also lead to negative consequences, such as increased stress levels, decreased morale, and high turnover rates.
The history of stack ranking
In the 1980s, Jack Welch, the CEO of General Electric, pioneered stack ranking. The idea behind it was to rank employees based on exemplary, meeting expectations and in need of improvement. Because only a few employees can be ranked as ‘exemplary,’ Welch reckoned that this ranking would boost worker productivity and create a competitive work culture. He felt that employees would be motivated to do better than their peers, because if they happened to rank in the bottom 15%, they would be slated for layoffs.
Over time, this method of talent management grew to be infamous rather than famous. Several business giants such as Amazon, Microsoft, and even GE themselves, have parted ways with this management method. This happened in the wake of rising toxic work cultures and a cap on innovation, which these companies attributed to the ‘rank-and-yank’ culture.
The pros of stack ranking
While stack ranking is now unpopular, when it initially was put into practice, these were some of the pros:
- It creates a competitive environment in which employees were motivated to outperform their colleagues.
- Stack ranking enables managers to identify high-performing employees and ensure that they are rewarded for their efforts.
- Increased productivity and efficiency in the workplace.
- Finally, stack ranking can help managers make difficult decisions, such as who to promote or who to fire.
The problems with stack ranking
Today, the talent marketplace focuses on flexibility, employee growth and development, and supportive work environments. In contrast, stack ranking seems almost antithetical to these features. Here are some more problems with stack ranking as a management method:
- It can create an environment of competition among employees, which can hinder innovation, collaboration, and teamwork.
- Stack ranking can lead to a "rank and yank" culture, in which managers are constantly looking for employees to fire. This can lead to high turnover rates, which in turn can be quite costly for the company to cover. Not only do they have to replace the departing employee, but they also have to deal with any kind of negative publicity from the employee who is leaving.
- Finally, stack ranking can build a toxic work culture where employees fear feedback from their managers, are individualistic rather than team-oriented, and feel a lack of trust when it comes to their peers.
Stack ranking is a controversial management method, with proponents arguing that it can motivate employees and help managers identify high performers. However, stack ranking can also lead to decreased morale and increased stress levels. Therefore, it is important to weigh the pros and cons of using this system before implementing it in the workplace.
When to use stack rankings
Stack ranking should only be used after careful consideration. If you decide to use stack ranking, be sure to clearly communicate the purpose of the system to employees and stress that it is not intended to create a competitive environment. Additionally, make sure that managers are aware of the potential negative consequences of stack ranking and take steps to avoid them. Finally, be prepared to make changes to the system if it is not working as intended.
When not to use stack ranking
Stack ranking should not be used in environments where creativity and innovation are important. Additionally, stack ranking should not be used if there is already a high level of stress or competition among employees. Finally, stack ranking should not be used if managers are not prepared to handle the potential negative consequences.
Today’s workplaces have evolved since the debut of stack rankings as a management method
The pandemic has transformed the value-system in talent management. Today, organizations hold performance reviews that promote productivity, drive business growth, and perhaps most radically, chart a growth and development trajectory for employees. Companies use tools like Mesh, where continuous feedback - delivered with examples, context, and helpful recommendations - helps employees reach their professional goals. Want to know more? Sign up for a free demo with Mesh to know how to set your organization and your people up for success.