Stack Ranking Reality
3 actions you must take to succeed in such a system
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Stack ranking by managers and companies is a controversial topic.
Here is what I actually saw in my 15 years as an Amazon executive and what you can do if you work in a team or company with this practice.
Stack ranking is the process of putting employees in order from "best" to "worst."
The best get bigger raises, the worst get performance plans.
At Amazon, what I actually saw was "stack ranking" by buckets.
Amazon divided performance, as most companies do, into categories.
For most of my time at Amazon the categories were:
Outstanding
Exceeds Expectations
Meets Expectations
Needs Improvement
And one at the bottom that was so bad we never used it, but meant "terrible, fire them fast"
There were quotas for each bucket.
At times in the company these quotas were very firm (hit the exact percentage).
At times they were softer (be close to the percentage).
Most leaders recognized that with a very small team the quotas did not make sense.
In a six person team, you might have two people truly at the top or the bottom.
What I experienced was that the quotas were only "enforced" at the level where a leader had 50+ people.
The idea was that 50 people was enough for a statistical distribution to kick in, and if one group within that 50 had two high performers, another would have two low performers.
I am not here today to address either the justice or the efficacy of stack ranking.
My goal is to share what I personally saw at Amazon and to discuss how to succeed in such a system.
Most companies have some performance ranking system.
They also share a belief that giving everyone the top rating so that they feel good is not an honest nor useful process.