Microsoft CEO Satya Nadella.
During employee performance appraisal periods, Microsoft manages to adjust individual rankings based on the relative positioning of employees within a team to ensure that too many employees receive the highest rank and associated salary. I’m looking for a job. This was revealed through Microsoft internal documents and employees.
This was requested when Microsoft introduced a new evaluation system in 2023.
But some are comparing this adjustment process to the controversial “stack ranking,” an evaluation method in which managers plot employees on a forced ranking chart (also known as a vitality curve).
It is well known that Microsoft used stack rankings during the era of CEO Steve Ballmer. But this system requires managers to rank employees from 1 to 5, and there is always someone who gets the lowest score. Stack Ranking was so unpopular within the company that it was officially discontinued at the end of 2013, and in early 2014, Satya Nadella, known for his good-natured personality, was appointed CEO.
Some employees feel that the essence of stack rankings has returned, given the instructions given to managers on how to handle performance reviews. A person involved in the 2023 performance appraisal told Insider as follows:
“What we’re telling our employees is complete nonsense. First of all, Microsoft is telling its employees that it’s no longer using stack rankings, but that’s not the case.”
How Microsoft’s performance appraisal system works
The company’s managers scored employees on a 0-200 scale for the 2023 performance review, as they had previously. This scale is called the “ManageRewards slider.” The company prohibits managers from sharing it or communicating their scores (known as “tick marks”) to employees.
An internal document states:
“You shouldn’t discuss slider positions or tick marks with your direct reports.
Tick marks are not meant to represent rankings or labels; they are meant to help managers determine impact and recommend consistent compensation across the company.”
Microsoft’s annual performance appraisals typically begin with performance appraisals in April, and employees are notified of how their performance will be reflected in their compensation starting in mid-August, with payments due on September 13 in 2023.
The process begins with front-line managers, who assess the impact of their employees and recommend where they should be placed on the slider. Another senior executive then considers “differentiation,” or where employees land so that the team is distributed along a slider. The average performer is around 100, with 0, 60, and 80 being low performers and 120, 140, and 200 being high performers.
A Microsoft spokesperson acknowledged that the company is encouraging managers to differentiate, but said it’s purely to reward high performers. The spokesperson said there are no quotas or requirements to rank employees lower, and managers only need to stay within budget.
One manager, who likened the process to stack ranking, said some employees may actually have to lower their scores. After this manager is instructed to properly “differentiate” the employees on his team across the sliders, he decides to set aside other employees to fund raises for the employees he wants to keep. We had no choice but to lower the score of the staff member than they deserved.
In 2023, along with this slider, Microsoft introduced a new employee evaluation system consisting of the following four stages. Its rating is
- Impact below expectations (LITE)
- Impact slightly below expectations (SLITE)
- Successful Impact
- Exceptional Impact
A “successful impact” is defined as success in all aspects of the job and “exceptional” performance in some areas, which puts it in the mid-range, according to an internal document reviewed by Insider.
An internal document states: “If an employee makes a successful impact, their reward will be placed in the middle range of opportunity.” “If an employee makes a slightly lower impact than expected, their reward will be placed in the lower middle range of opportunity.” It is written that “it will be done”.
The new system comes after Microsoft suspended pay increases and cut its budget for bonuses and stock awards in May. At the time, Microsoft’s chief people officer, Kathleen Hogan, was directing managers to reduce the number of employees given “extraordinary compensation,” meaning high performance reviews that lead to increased pay or bonuses. Hogan said in an email that she “needs to hire more mid-range employees.”
Microsoft is also directing managers not to discuss budget cuts with employees during performance reviews. Instead of using budget cuts as an “explanation” for determining compensation for individual employees, the company urged them to emphasize that employees’ own “impact” determines their “compensation.”
[Original text]
(Edited by Ayuko Tokiwa)
Source: BusinessInsider
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