February 28th, 2017
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: firstname.lastname@example.org
In practice, Uber’s values were codified by its internal ratings and performance reviews, a process employees simply referred to as “perf.” Uber uses stack ranking, a system popularized by GE legend Jack Welch that requires managers across a company to assign their employees numeric ratings along a bell curve. The system, alternatively termed forced ranking and “rank and yank,” is highly controversial as it demands that high performers within an organization be offset by a certain number of low performers, who are often fired or pushed out.
In interviews with Quartz, half a dozen current and former employees described the company’s internal review process as “competitive,” “very unfair,” and “a black box.” Uber managers rank their employees twice a year on a scale from one (low) to five (high). Three is average, five so rare that it’s reserved for “Jesus or Travis,” one former employee joked. Employees who receive twos or ones are considered underperformers and placed on performance improvement plans (“PIPs”), which also serve to warn that they could be fired or let go down the line.
There are other consequences to a low rating. Being an underperformer means not being able to transfer teams, multiple people told Quartz, a plight also described by Fowler in her blog post. Ratings also affect employee bonuses, which are granted largely in equity. “If you get a very high performance rating, that is a way to do very well,” a former employee said.
…At Uber, former employees say the system bred competition and infighting that was made worse by whirlwind growth and sprawling, decentralized management. Uber has historically appointed general managers in each city to facilitate its rapid growth. These GMs were expected to master the ins-and-outs of their specific markets and in exchange were allowed to operate largely autonomously. Geographic rivalries were common. At all-hands meetings, Uber would usually start by highlighting the change in ride volume for different markets around the world. A former employee compared it to the scattered and competing factions within the Empire in Star Wars.
There are so many things wrong at Uber, do they really need to focus on stack ranking? I do think most companies should try to track who the bad employees are, and push them out each year.
But I think the stack ranking is fundamentally broken if its done by managers. It should be done by one’s peers, always. And the results should not be normalized. It is a crime against rationality to normalize data that is fundamentally not normal. Unless a company employs every person in the world, it’s employees are probably not a normal distribution (I’m exaggerating, but only slightly). Just give every employee 3 votes a month and see who gets upvoted. And who doesn’t.Source