Trouble with the Curve

Just a few days ago, news spread that Marissa Mayer would use Jack Welch tactics to encourage a high-performance culture at Yahoo. Forced rankings are to be used to help along – and weed out – Yahoos who are not quite meeting expectations.

That’s remarkable in a number of ways. First off, when Mayer relinquished Yahoo’s long-standing telecommuting policy, a fierce debate kicked off among human resource professionals about the value of unplanned encounters at the water cooler as a vitamin to a company’s creativity. Indeed, the decision to curb work from home was dressed up as a move to support collaboration and innovation. Quickly, however, news leaked that a prime motive had been the increase of control over those telecommuters who pursued personal ambitions while clocking Yahoo time. (The perils of avoiding straight talk)

But well, there clearly were performance issues within Yahoo – engrained in culture and processes. The new CEO was doing something about it. The jury was – and is – out as to how helpful increased face time really is to spurn performance and creativity. You may have doubts – I do. But the necessity to make a move like this – corralling in employees – shows there is trouble and most certainly that trouble runs deep.

Now comes the next act at Yahoo: Departing from a more qualitative performance management system, “the curve”, was introduced at the firm. Infamous and popular, stack ranking became a fashionable way for managing performance after Jack Welch made it popular while at the helm of General Electrics. According to the Wall Street Journal, 30% of Fortune 500 companies still rank employees along the curve.

But there is trouble with the curve – and it has been broadly reported. In a widely noted article on “How Microsoft Lost Its Mojo”, Vanity Fair reported in depth about the havoc that stacked ranking has wrought on Microsoft’s ability to innovate. As VF reports, “every current and former Microsoft employee I interviewed – every one – cited stacked ranking as the most destructive process inside of Microsoft.”

Memory is short and history repeats itself. Ironically, days after seeing the curve introduced at Yahoo, Microsoft announced yesterday that it would abandon stacked ranking.

Admittedly, performance management at large firms whose staff can never be all top performers becomes a serious challenge. But even with a toned-down forced stacking component, annual performance reviews that are too quantitatively slanted cause managers and employees to plan their days and years around the review – rather than around products, services, and supporting staffs’ professional development.

Google’s Project Oxygen,  “an evidence-based quest to build a better boss”, found that people-centric behaviors were the key differentiator between average and great bosses. That included active listening, coaching, supporting staff development, taking an interest staff members’ success and well-being. (Evidence-based People Management – Google Pushes On)

Studying the emotional and rational factors that turn team members into team players, Collaborative Coaching, an organizational effectiveness consultancy, found 12 distinct behaviors that encourage collaboration. (The survey is ongoing and free.)

These and other findings demonstrate that instead of ranking employees, managers can make better use their time providing qualitative and behavioral feedback to staff.

After limiting work from home, the introduction of “the curve” at Yahoo seems to be another pointer at how far a turn-around is for a former Internet giant.

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