Stack ranking (see Vitality Curve)
Constantly replacing (or threatening replacement of) the bottom performers on an annual basis seems like incremental optimization. So you get two classes of performers replaced: Ones in a long term slump and ones that are persistent performance problems/bad fits. If you’re looking at machinery, then being unable to distinguish between the temporarily malfunctioning and the permanently broken is of no major consequence. But with humans, if they are temporarily malfunctioning due to life circumstances, personal issues, or recovering from burnout, you’ve just discarded someone who likely has institutional knowledge, established relationships, and could return to being a high performer.
The real problem is that stack ranking treats your workforce like a statistical distribution that must maintain its shape regardless of actual performance. Got a team of eight excellent engineers? Sorry, two of them are now “bottom performers” by definition. Hired nothing but rockstars this year? Congratulations, some of your rockstars are now officially mediocre.
This creates perverse incentives. Smart employees learn to avoid teams with other high performers. Why join the infrastructure team full of senior engineers when you could join the feature team with a couple of passengers? You’ll rank higher, and ranking is what matters at review time.
The statistical absurdity compounds when you realize that the bottom 10% getting cut this year might have been middle-of-the-pack last year, and could be top performers next year—but they’ll never get the chance because we needed to satisfy our quota of ritualistic firings. We’re not optimizing for performance; we’re optimizing for the appearance of optimization, which is a very different thing.
Meanwhile, the stack ranking process itself consumes enormous amounts of management time that could be spent on actual work. Managers spend weeks arguing over whether Sarah deserves a 3 or a 4, while the real problems—unclear requirements, technical debt, process inefficiencies—remain unaddressed.
And let’s talk about what happens to team dynamics. The moment you tell people they’re competing against their teammates for survival, collaboration dies. Why would I help you solve that gnarly bug when it might make you rank higher than me? Why would I share that clever solution when keeping it to myself might be the difference between keeping my job and losing it?
Stack ranking is management by spreadsheet, the corporate equivalent of deciding which child to abandon based on their last report card.