Stack Ranking my view
Stack Ranking: Is it good or bad?
Stacking Ranking, some time referred as “ranking and yanking” system, has been widely adopted by many companies in some forms as companies need a way to fairly evaluate their employees and have a structured system for compensation difference. This is especially necessary to avoid lawsuit on discrimination and reduce corporation’s legal risks when it comes to firing employees.
Its effectiveness seems to vary by industries or even by functional group within the same company. For instance, ranking and yanking may prove effective in companies that are highly competitive and depending on individual performance, such as investment banks, law and accounting firms, and consultancies. These industries typically recruit large number of junior staffs so they use stack ranking system to drive internal competition for greater results of the company as whole. On the other hand, companies or division within a company that rely heavily on cooperation , collaboration, and team works, ranking and yanking may, when it’s done often and repeatedly, could actually hurt the business as the people in bottom quartile quickly become average employees instead of poor performing employee and losing such employees may be very costly.
This is increasingly difficult to implement and enforce for companies or divisions within a company that have large portion of high performance employees, thus they don’t follow such ‘bell shaped’ distribution. Therefore many companies do not simply ‘rank and yank’. They use stack ranking mainly to determine the compensation as a way to motivate workers. Such compensation usually include BSMA (Base Salary Merit Award, or a.k.a. annual salary increase), Bonus payout and KCA (Key Contributor Award, which is extra bonus paid to small percentage of top performers).
In my company, stack ranking has been implemented for quite long time. Our employees will be categorized into 5 rating buckets: Far Exceeds (expectation),
Stacking Ranking, some time referred as “ranking and yanking” system, has been widely adopted by many companies in some forms as companies need a way to fairly evaluate their employees and have a structured system for compensation difference. This is especially necessary to avoid lawsuit on discrimination and reduce corporation’s legal risks when it comes to firing employees.
Its effectiveness seems to vary by industries or even by functional group within the same company. For instance, ranking and yanking may prove effective in companies that are highly competitive and depending on individual performance, such as investment banks, law and accounting firms, and consultancies. These industries typically recruit large number of junior staffs so they use stack ranking system to drive internal competition for greater results of the company as whole. On the other hand, companies or division within a company that rely heavily on cooperation , collaboration, and team works, ranking and yanking may, when it’s done often and repeatedly, could actually hurt the business as the people in bottom quartile quickly become average employees instead of poor performing employee and losing such employees may be very costly.
This is increasingly difficult to implement and enforce for companies or divisions within a company that have large portion of high performance employees, thus they don’t follow such ‘bell shaped’ distribution. Therefore many companies do not simply ‘rank and yank’. They use stack ranking mainly to determine the compensation as a way to motivate workers. Such compensation usually include BSMA (Base Salary Merit Award, or a.k.a. annual salary increase), Bonus payout and KCA (Key Contributor Award, which is extra bonus paid to small percentage of top performers).
In my company, stack ranking has been implemented for quite long time. Our employees will be categorized into 5 rating buckets: Far Exceeds (expectation),