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Will Microsoft Become More Competitive By Removing Employee Ranking?

Microsoft's decision to do away with its so-called "rank and yank" method of evaluating the performance of its employees (made famous by GE's former CEO Jack Welch) is Redmond's  latest effort to get them to work more closely toward CEO Steve Ballmer's vision of One Microsoft.

It's no secret that the siloes between divisions in Microsoft have led to bitter disputes over technical and product direction. Critics argue those rivalries and fiefdoms helped pave the way for companies such as Amazon, Apple, Google, and VMware to lead or eat into markets where Microsoft once had an edge. How the notion of employees being ranked played into those rivalries is hard to say. But removing employee ranking should reduce the Survivor mentality it aims to foster. Experts also argue companies that don't have rigid employee ranking processes are more attractive to talented developers. Removing employee ranking could also help retain valued employees. Of course the end goal is making all Microsoft employees more focused on customer needs.

The One Microsoft reorganization aimed to bring development, sales and marketing with a common goal and it appears this latest move is an outgrowth of this transition. The irony of One Microsoft of course is that it's modeled after One Ford, which the auto-giant succinctly describes as One Team, One Plan, One Goal. As I noted yesterday, Ballmer has called upon Ford CEO Alan Mulally for advice on how to turn Ford around. Of course it's also intriguing given that Ballmer and Chairman and Founder Bill Gates are said to want Mulally to take the reins of Microsoft.

Does removing "rank and yank" further stack the deck for Mulally? That could be one way of looking at it but regardless who becomes Microsoft's next CEO it's in his or her interest to have employees who are on the same page. Only time will tell to what extent this will accomplish that or if a new CEO will have a different philosophy for evaluating employee performance.

Posted by Jeffrey Schwartz on 11/19/2013 at 12:40 PM


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