Stack-Ranking and Yahoo's QPR Systems need to be Put in the Dustbin of History

You figure that anything that messed up the MSFT of the Ballmer era should have been forgotten. However, it seems that Yahoo embraced the mess that was Stack-Ranking and it has the company reeling.

Mayer would stick to this semantic line of defense for the next year. It irritated employees, and even some of Mayer’s direct reports, to no end. The problem was that while “stack rank” and “bucket sort” were different words, the systems those words described had the same effects. Mayer had given the company’s senior managers orders for how many of their employees could go into each bucket. These senior managers had then passed down the ratios to the managers below them. And so on.

It was a forced curve. In general, only 75% of any group got in the top three buckets. Twenty-five percent of every team had to go into the bottom two — “occasionally misses” and “misses.” The result: Teammates directly competed with each other to make sure that they weren’t a part of that 25%.

It was stealth layoffs by any other name. What happens with this system is that talented people don't work together so you cannot multiply their brilliance. So there will be no All-Star team at any company because one of those people end up getting put in the bottom 25%. If Yahoo was smart they should have had this in place for maybe 6 months and you clear the deadwood. Then you change to a different system that rewards teamwork. Maybe a team bonus system or something similar. Mayer was lucky that AliBaba held up the stock price because the core Yahoo business seems to be in shambles.