Performance management systems have undergone dramatic changes since the early 2000s, with many companies abandoning the controversial practice of stack ranking. Having experienced this system firsthand for over a decade, I’ve witnessed both its demotivating effects and the positive changes that come when organizations move to more collaborative approaches.
What is Stack Ranking?
Stack ranking (also called forced ranking or rank-and-yank) is a performance management system that distributes employees into predetermined performance categories based on relative comparison rather than absolute performance standards.
Common Implementation:
- Top performers (10-20%): Highest ratings, bonuses, promotions
- Average performers (70-80%): Standard raises and treatment
- Low performers (10-20%): Performance improvement plans or termination
The system forces managers to rank employees against each other rather than evaluating them against job requirements or objectives.
A Personal Wake-Up Call
Here’s a conversation I had with a departmental manager that perfectly illustrates how pervasive this system had become:
Me: Other companies are getting rid of stack ranking. Here are some articles.
Manager: Why do you think we’re doing stack ranking? That’s not us.
Me: Our department ranks everyone - with quotas - into performance buckets: Great, Okay, & Subpar
Manager: We do not have quotas per rank!
Me: So, everyone can be rated the same? We could all get “Great”?
Manager: No…
Me: …
Manager: …
Me: Wait, so we’re basically being stack ranked here?
This moment of realization highlighted how normalized these systems had become, even among managers who didn’t recognize they were implementing forced rankings.
The Great Corporate Exodus: Who Left and When
Major Company Departures from Stack Ranking
| Company | Original System | Abandonment Year | Reason for Change |
|---|---|---|---|
| Microsoft | 20-20-40-13-7% | 2013 | Widely unpopular, damaged collaboration |
| Adobe | Traditional curves | 2012 | Moved to “Check-In” system emphasizing collaboration |
| GE | 20-70-10% | 2015 | Shifted focus to team building and development |
| Ford | 10-80-10% | 2009 | Abandoned amid class action lawsuits |
| Accenture | 1-5 scale rankings | 2015 | Replaced with continuous performance development |
| Deloitte | Annual reviews | 2015 | Moved to weekly check-ins |
| IBM | 1-4 rankings | 2016 | Adopted more frequent, development-focused conversations |
| Netflix | ”Keeper test” | Evolved 2018+ | Maintained high standards but removed forced curves |
Companies That Never Adopted or Quickly Abandoned
- Google: No forced curves or mandatory repercussions
- Spotify: Focus on team performance and individual growth
- Buffer: Transparent salary formulas and peer feedback
- Patagonia: Values-based performance aligned with company mission
Why Companies Made the Switch
The Research Behind the Exodus
Statistical Evidence:
- Only 14% of companies used forced ranking in 2011, down from 49% in 2009 (Leadership IQ research)
- Companies with forced ranking showed lower employee engagement scores (Lawler, 2002)
- Higher voluntary turnover among mid-level performers (Mulligan & Bull Schaefer, 2011)
Direct Company Statements
Adobe’s Transformation:
We abolished stack ranking and annual performance reviews in March 2012. We now use Check In – a system that fits with Adobe’s corporate culture of collaboration and creativity.
Microsoft’s Realization:
Corporate America has largely lost confidence in management programs that jam employees onto bell curves
The Collaboration Problem:
Stack ranking is an incentive system that rewards the wrong behavior… What happens if you’re working with a superstar team? You’ve just forced a distribution that doesn’t exist.
- Marcus Buckingham, Management Advisor
Core Problems Identified
1. Artificial Scarcity
- Forces competition where collaboration is needed
- Punishes high-performing teams with artificial distributions
- Creates “zero-sum” thinking among teammates
2. Demotivation of Good Performers
- Solid performers become complacent knowing advancement requires others to fail (Lipman, 2012)
- Reduces innovation and risk-taking
- Encourages gaming the system rather than focusing on results
3. Manager Manipulation
- Reviews become about “justifying the numbers” rather than development
- Managers spend time on ranking logistics instead of coaching
- Reduces meaningful feedback and career development conversations
4. Legal and Ethical Issues
- Disproportionate impact on protected classes (Lawler, 2002)
- Difficult to defend in wrongful termination cases
- Creates hostile work environments
Modern Performance Management Alternatives
Continuous Performance Development
Key Features:
- Regular check-ins (weekly or bi-weekly) instead of annual reviews
- Focus on goal-setting and progress tracking
- Real-time feedback and course correction
- Development-oriented conversations
Example Companies: Accenture, Deloitte, IBM
Objective-Based Systems (OKRs)
Characteristics:
- Goals set collaboratively between manager and employee
- Measurable outcomes rather than subjective comparisons
- Quarterly reviews with adjustable objectives
- Emphasis on learning from both successes and failures
Example Companies: Google, LinkedIn, Spotify
Team-Based Performance Models
Approach:
- Evaluate team outcomes and individual contributions
- Peer feedback and 360-degree reviews
- Shared accountability for team results
- Recognition systems that reward collaboration
Example Companies: Buffer, Patagonia, many startups
Values-Based Assessment
Focus Areas:
- Alignment with company values and culture
- Contribution to team and organizational goals
- Professional development and skill growth
- Impact on customer and stakeholder outcomes
When Stack Ranking Might Still Be Used
Sales Organizations
Some sales teams continue using ranking systems because:
- Individual performance is easily measurable
- Competition can drive results
- Clear metrics exist for comparison
- Team collaboration is less critical
Specific Contexts
- Temporary turnaround situations where rapid performance improvement is needed
- Individual contributor roles with minimal team interdependence
- Organizations with clear performance metrics and legal frameworks
Important Note: Even in these contexts, many companies find alternative motivation methods more effective long-term.
Implementing Modern Performance Management
Transition Strategies
1. Start with Manager Training
- Coach managers on development-focused conversations
- Provide tools for regular feedback and goal-setting
- Remove quota-based thinking from evaluation processes
2. Redesign Performance Conversations
- Focus on future growth rather than past rankings
- Include career development and skill building
- Make feedback timely and actionable
3. Update Compensation Philosophy
- Decouple raises from forced rankings
- Create multiple paths for recognition and advancement
- Base decisions on objective criteria and market data
Key Success Factors
Leadership Buy-In
- Executive commitment to cultural change
- Consistent messaging about new approach
- Patience during transition period
Manager Development
- Training on effective feedback techniques
- Tools for ongoing performance conversations
- Support for difficult performance discussions
Employee Communication
- Clear explanation of new system benefits
- Transparency in evaluation criteria
- Regular updates on system effectiveness
The Current State (2025 and Beyond)
Emerging Trends
AI-Assisted Performance Management
- Data-driven insights for manager coaching
- Predictive analytics for career development
- Bias detection in performance evaluations
Skills-Based Assessments
- Focus on competency development
- Alignment with business needs and market changes
- Continuous learning and adaptation emphasis
Employee Experience Platforms
- Integration of performance management with daily work tools
- Real-time feedback and recognition systems
- Peer collaboration and knowledge sharing features
Lessons Learned
What Worked:
- Companies that invested in manager training saw better outcomes
- Systems focused on development showed higher employee satisfaction
- Regular feedback improved performance more than annual rankings
What Didn’t:
- Simply removing rankings without alternative systems created confusion
- Lack of manager training led to avoidance of difficult conversations
- Some high performers initially felt less recognized without clear rankings
Implications for Modern Workplaces
For Employees
Questions to Ask Your Employer:
- How does our performance management system support my development?
- What criteria are used for advancement and compensation decisions?
- How frequently will I receive feedback on my performance?
- Does our system encourage collaboration or competition?
Red Flags to Watch For:
- Forced percentage distributions for performance ratings
- Annual reviews as the primary feedback mechanism
- Managers who avoid performance conversations
- Lack of transparency in evaluation criteria
For Organizations
Implementation Checklist:
- ✅ Train managers on effective performance conversations
- ✅ Establish clear, objective evaluation criteria
- ✅ Create multiple feedback channels (peers, customers, self-assessment)
- ✅ Align performance management with business objectives
- ✅ Regularly assess system effectiveness and employee satisfaction
Conclusion: The Human Side of Performance Management
The widespread abandonment of stack ranking represents more than just a change in corporate policy - it reflects a fundamental shift in how we think about human potential and team dynamics. Organizations that recognize employees as whole people rather than numbers on a curve create environments where both individuals and businesses thrive.
Key Takeaways:
- Context matters: Performance management systems should fit organizational culture and business needs
- Development over ranking: Focus on growth and improvement rather than comparison
- Frequent feedback: Regular conversations are more effective than annual rankings
- Manager skill is critical: The best systems fail without skilled, trained managers
- Transparency builds trust: Clear criteria and fair processes improve employee engagement
The future belongs to organizations that can balance high performance standards with human-centered approaches to development and recognition. As we’ve learned from the companies that made this transition successfully, abandoning forced rankings isn’t about lowering standards - it’s about raising them in a way that brings out the best in people and teams.
For those still working in stack-ranked environments, take heart: the momentum toward more humane and effective performance management continues to grow. The question isn’t whether your organization will eventually change, but how quickly it will adapt to attract and retain the best talent in an increasingly competitive market.