Stack ranking is controversial. It destroyed Microsoft from the inside out, yet it helps make Valve the incredible company it is (warning, large PDF). Put simply, stack ranking is the practice of rating employees directly against one another, rather than against their job descriptions or some other standard. You're ranking your employees... stacking them on top of one another based on whatever criteria you find helpful. At Microsoft, it looks like stack ranking was the supervisor's responsibility, which over time led to a culture of intense competition between employees that destroyed moral and the team environment. At Valve, stack ranking is performed by your peers (as is almost everything), so it appears to contribute to the sense of ownership that each person has with each other. That's a very cursory analysis and it's likely flawed... but it's helpful to examine as a means of gaining team insight. Stack ranking, as with any other form of management and evaluation, is only going to cause damage or success in direct relation to how to use the results.
I oversee a group of staff responsible for tracking fundraising campaigns, donor relationship management, data entry and various other tasks to do with the donations and fundraising process. This is a brand new team, assembled from staff in various departments, that I was essentially able to hand-pick. It's been 3 months since the team was assembled and I've been managing them remotely 100% of the time. I'll write about remote management another day, but for now... let's just say remote management sucks. Avoid if at all possible. Anyway, as I said it's been 3 months, so it's time to review how things are working, do some reviews, and start my preliminary budget plans as we draw closer to year-end. I wanted to gain a little insight into how the team feels about one another, so I turned to a simple stack ranking experiment.
Asking the right questions of your staff is a critically important skill that few people actually possess. In preparing a simple survey for my donor team, I wanted to extract as much insight as I could from as few questions as possible. I figure more questions dilutes the value of any one of them, which makes the analysis weaker. More questions also take longer to fill in; so it's better for you and I to spend a little longer planning than to waste our teams' time with hap-hazard random questions.
I settled on three questions. Two of fairly high intensity, and one low intensity. I define intensity in this case as a combination of the following factors:
potential emotional impact (could someone lose their job based on my answers?)
mental requirements (mathematic operations and/or detailed ranking that affect the technical difficulty of answering the question at all)
time it'll take to answer the question
I may dig into the other questions later, but for this post I'll focus solely on the first question: Thinking of the knowledge, skills, attitude and company values embodied by each of your teammates (and ignoring their length of employment, perceived seniority, etc.) provide a new hourly salary to each member of the team, including yourself. No hourly rate can be lower than [minimum legal wage] and the total combined rate cannot be higher than [current combined rate]. Along with each wage field was a secondary field to indicate how comfortable they felt answering for this person (in case they were more confident answering for some than for others).
This question serves 4 primary purposes:
I suspect that most of our staff have never been asked to do something like this. That means this will provide a learning opportunity and challenge they have not yet faced. I will always put a new learning opportunity in front of staff when I have the chance to do so, as should you. If your staff are familiar with this kind of exercise, then this benefit may be reduced somewhat.
I suspect that some people will be uncomfortable with this question. How they deal with their discomfort informs us of certain aspects of their professional and personal response to unconformable situations. Do they blindly go ahead because their boss said so? Do they refuse to answer, but remain silent? Do they refuse and explain themselves?
If it turns out we are paying a person notably more than their colleagues collectively think they should be paid, then this indicates one of two possible problems:
Scenario A, in which the person is in fact providing the value they are paid, but their colleagues undervalue them. This could indicate significant problems in the understanding of one another's jobs. I need this team to act as a cohesive whole, and if the entire team is misunderstanding the value provided by one of their teammates, then I need to work with that teammate to increase their profile; I need to work with the whole team to improve their cross-understanding; and I need to work with the others to teach them how to look beneath the surface of what value is being provided.
Scenario B, in which the consensus is correct and the staff member is being paid notably more than the value they are providing. This indicates that either we have someone working on the wrong stuff, someone being paid too much, or someone who has lost their love of our organization and needs to move on. Obviously any of those would need to be addressed.
If it turns out we are paying a person notably less than their colleagues think they should be paid, then this obviously indicates a number of problems as well, such as:
Scenario A, in which the person is providing a lot more value than they are paid. The simple solution is to pay them more, which you likely should do, though there may be other things to address as well. This is really the happiest of outcomes, provided you've got some resources at your disposal, however meager. If the staff member has been content thus far to provide high value at low wages, perhaps wages aren't a major motivating factor for them. You'd need to find out what makes them tick, what brings them satisfaction and see if you can improve their compensation through other channels than salary alone. Let me be clear that while few will turn down a raise, a raise might not always provide the "thanks" that you're trying to say, or in this case specifically, might not align the compensation-to-value ratio of your team that you need to resolve.
Scenario B, in which the person actually isn't providing the value that their teammates think they are. This is an awkward situation. It most commonly happens with people who've been doing a job for a long time, and are the possessors of the sacred knowledge. This knowledge imbues them with mystical power and a certain leverage over their teammates. If over time they stop performing, the sacred knowledge may blind people to that fact. Alternatively, over time the sacred knowledge may become irrelevant, making this person's value proposition no longer what it once was. This is a cruel reality, but you need to deal with it nonetheless. Often times an intelligent new hire will have the best perception on this kind of person: they're quickly learning just who actually makes things run, and they haven't yet been awed by the power of the sacred knowledge; they also may be better positioned to know that the knowledge is entirely irrelevant. Seek out these people! Solving the problem could take a number of forms. Lowering the person's wage is an obvious option, but you need to be aware of the repercussions. Terminating the underperformer's employment may upset all your staff, since they think their teammate is awesome and of very high importance, while ratting out his or her true lack of value will just make you look like a jerk... so, like I said, it's awkward. I've seen people who've fallen into this scenario be gently laid off with severance, be fired on the spot (this only in the worst kind of sacred-knowledge abuse), or retained and worked with to come up with a more suitable fit for them that balances their value with their compensation.
For my part, I'm now analyzing the results of the survey. It's providing just the kind of insight I had hoped for. It's also triggered some very encouraging conversations with members of the team, including one who was so uncomfortable with the salary question that she opted to not partake. After a healthy discussion on my perspectives and desired outcome, however, she decided to go through with it. That's a major win for the whole team, but especially for our relationship. If that was the only outcome at all from this whole exercise, then it served its purpose and was totally worth it.
Take enough time to ensure you ask the right questions. And don't be afraid to try out a little stack ranking within your teams... just be wise in how you use the results.
The image of stacked tiles is from http://www.flickr.com/photos/nicholasjon/4145907468/