Please shut up about stacked ranking.

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Photo on 2011-09-21 at 09.50Years ago, I was asked to keynote a corporate event for Microsoft’s HR team. I didn’t have a fully developed point-of-view about HR and talent, just yet, but I said yes because it was a great honor.

I did okay. I didn’t suck.

The day was notable because my friend Lance came to see me speak. I wore a fabulous Trina Turk red dress. I was also wearing a pair of Vera Wang heels but Lance told me to ditch the heels and put on a pair of insanely fabulous Cole Haan boots that zipped to my knees.

LFR was born.

Before I took the stage, Steve Ballmer opened for me. I am not exactly sure how to describe the experience of following Microsoft’s CEO except to say, fuck yeah, Steve Ballmer opened for me. How you like me now?

And I have to tell you that listening to Ballmer was inspiring. Do I own any Microsoft products? No. Did I get a nice paycheck and a cool t-shirt from the event? Yes. But I really do believe that Microsoft is an important company. Google gets legitimate props for building and entrepreneurial and innovative company; however, Google+ is exhausting and those Google glasses are ridiculous.

Anyway, Steve Ballmer and Microsoft have their faults — but they also get a bum rap for a practice called stacked ranking. It’s like the Glengarry Glen Ross version of performance management. Do you know it?

First prize is a Cadillac Eldorado. Second prize is a set of steak knives. Third prize is you’re fired.

But having worked with hundreds of companies, I know that all versions of performance management are variations of forced ranking and stacked ranking. This is why people hate HR. First prize will always be a car. Second prize will always be a reminder that you didn’t win first prize. And third prize is you’re fired.

There are new technologies and methodologies out there that can improve the performance management process to some extent. Managers should lay out clear goals and expectations and coach people to improve their performance. But goal-setting happens at Microsoft and plenty of other mature companies — except that managers have honest discussions with employees about the very tight labor budgets. The stakes are higher. Being in the bottom 10% of a profitable company that actually has the means to award raises and bonuses is an unfortunate place for you to be.

Step it up or get fired. That’s not an unreasonable request from your boss. Want to do it differently? Go start your own company. (Please. We need better companies out there. Do that.)

But don’t be fooled by people who talk about a crunchy-granola way of managing for peak performance. Stacked ranking and forced ranking may not outwardly happen at your company, but it happens. The fact that you don’t know about it is why you are not in charge.

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