In the world of employee performance management, organizations have been searching for effective methods to assess, motivate, and reward their workforce. One such practice that has gained significant attention, both for its perceived benefits and detrimental effects, is stack ranking.

Also known as forced ranking, stack ranking involves categorizing employees based on their performance and then ranking them against their peers. While it may initially appear to be a fair and efficient way to evaluate and differentiate employees, stack ranking has proven to be a deeply problematic approach with far-reaching consequences.

In recent years, numerous companies have abandoned stack ranking due to the negative impact it can have on employee morale, collaboration, and long-term organizational success. In this blog, we will delve into the concept of stack ranking, explore its inherent flaws, and discuss why it has become a source of discontent in many organizations. By understanding the problems associated with stack ranking, we can begin to appreciate the value of alternative performance management methods that prioritize fairness, collaboration, and growth.

What is Stack Ranking?

Stack ranking, also known as forced ranking, is a performance evaluation system that involves categorizing and ranking employees based on their performance relative to their peers within an organization. The primary purpose of stack ranking is to differentiate employees and identify high-performing individuals, average performers, and low performers.

In a typical stack ranking process, managers are required to distribute employees into predetermined categories or rankings, often represented as a fixed percentage or quota. For example, a common distribution might involve designating the top 20% of employees as "high performers," the middle 70% as "average performers," and the bottom 10% as "low performers."

The ranking is often based on various performance metrics, such as meeting or exceeding targets, achieving specific goals, or demonstrating certain competencies. However, the specific criteria for evaluation can vary depending on the organization and the nature of the work.

The outcomes of stack ranking can have significant implications for employees. High performers are typically rewarded with bonuses, promotions, or other incentives, while low performers may face consequences such as reduced compensation, limited career advancement opportunities, or even termination.

Stack ranking is rooted in the belief that differentiating employees based on performance will drive a competitive culture and motivate individuals to excel. Proponents argue that it helps identify and retain top talent while addressing underperformance. However, the practice has attracted considerable criticism due to its inherent flaws and negative consequences.

The Problem With Stack Ranking

Stack ranking has faced widespread criticism for several reasons, highlighting its problematic nature in the context of performance management. Here are some key issues associated with stack ranking:

• Undermines Collaboration: Stack ranking fosters a competitive work environment where employees are pitted against each other for limited rewards. This creates a culture that values individual success over collective achievements, leading to a decline in collaboration and teamwork. Instead of fostering cooperation, employees may become reluctant to share knowledge or assist their colleagues, as they perceive them as direct competitors.
• Discourages Innovation and Risk-Taking: The fear of being ranked poorly discourages employees from taking risks or pursuing innovative ideas. Stack ranking promotes a risk-averse mindset, as employees are incentivized to maintain a safe status quo to secure a higher rank. This stifles creativity and limits the potential for groundbreaking advancements within the organization.
• Biases and Subjectivity: Stack ranking is susceptible to biases and subjectivity, as it relies heavily on managers' personal opinions and perceptions. Factors such as personal relationships, likeability, or unconscious biases can influence the rankings, leading to unfair outcomes. This can result in the loss of talented individuals who may have been overlooked due to subjective judgments rather than objective performance metrics.
• Negative Impact on Employee Morale: The competitive nature of stack ranking often leads to demotivation and a decline in employee morale. When employees feel constantly pitted against their colleagues, it creates a sense of insecurity and uncertainty about their future within the organization. This can harm job satisfaction and overall engagement, ultimately affecting productivity and retention rates.
• Focuses on Short-Term Performance: Stack ranking tends to prioritize short-term results over long-term growth and development. Employees may prioritize seeking quick wins or engaging in activities that yield immediate benefits, rather than investing time in professional development or exploring more strategic initiatives. This short-term mindset can hinder the organization's ability to adapt, innovate, and thrive in the long run.
• Damages Employee-Manager Relationships: Stack ranking can strain relationships between employees and their managers. Employees may perceive the evaluation process as unfair or arbitrary, leading to a breakdown in trust and communication. Instead of fostering open dialogue and coaching, stack ranking often creates an environment of tension and animosity.
• Adversely Affects Diversity and Inclusion: Stack ranking has the potential to perpetuate biases and hinder diversity and inclusion efforts within organizations. Research has shown that it can disproportionately impact underrepresented groups, as subjective judgments and unconscious biases may influence the rankings. This can create barriers to equal opportunities and impede efforts to build diverse and inclusive workplaces.

As a result of these and other concerns, many organizations have recognized the drawbacks of stack ranking and have shifted towards more inclusive, collaborative, and development-focused approaches to performance management.

How Stack Ranking Undermines Collaboration

Stack ranking creates a competitive atmosphere where employees are constantly vying for limited rewards and recognition. In such an environment, individuals may become reluctant to share knowledge or assist their colleagues, fearing that it may diminish their own chances of securing a higher rank. Collaboration and teamwork suffer as employees prioritize personal success over collective achievements. The lack of cooperation hampers the exchange of ideas, slows down problem-solving processes, and limits the overall effectiveness of teams.

The emphasis on individual performance and rankings can lead to a "zero-sum game" mentality, where employees view their colleagues as direct competitors rather than collaborators. Instead of working together to achieve shared goals, employees may withhold information, ideas, or support in an attempt to outperform their peers. This stifles innovation and prevents the organization from benefiting from the collective intelligence and diverse perspectives of its workforce.

Stack ranking introduces an element of mistrust and unhealthy competition among employees. When individuals are pitted against each other, it erodes the sense of camaraderie and teamwork. Employees may feel compelled to protect their own interests and guard their work from potential rivals, hindering the free flow of information and impeding the collaborative spirit necessary for a thriving work environment. Moreover, the fear of being ranked poorly can create an environment of insecurity and anxiety, further damaging interpersonal relationships and inhibiting collaboration.

How Stack Ranking Discourages Innovation and Risk-Taking

evaluated and ranked based on their performance, they become hesitant to take risks or pursue innovative ideas. The fear of failure and its potential impact on their rankings can stifle creativity and discourage employees from exploring uncharted territories. As a result, the organization may miss out on valuable opportunities for growth, improvement, and innovation.

The focus on individual performance and rankings in stack ranking can shift employees' attention away from collaborative and innovative efforts. Instead of engaging in creative problem-solving or exploring new approaches collectively, employees may prioritize maintaining a safe status quo to secure a higher rank. The pressure to conform to established norms and expectations inhibits the willingness to challenge the existing processes and practices that could lead to breakthrough innovations.

Stack ranking creates a culture where employees are more concerned about short-term outcomes rather than long-term innovation. With the constant pressure to meet performance targets and rank higher than their peers, employees may focus on achieving quick wins or engaging in activities that yield immediate results. This can hinder the organization's ability to invest in research and development, experiment with new ideas, and foster a climate of continuous improvement. By discouraging risk-taking and long-term thinking, stack ranking limits the organization's innovation potential.

How Stack Ranking Leads to Biases and Subjectivity

Biases and subjectivity are inherent risks in stack ranking due to its reliance on managers' personal opinions and perceptions. Evaluating employees based on subjective judgments can introduce biases that impact the fairness and accuracy of the rankings. Factors such as personal relationships, likeability, or even unconscious biases can influence how managers assess and rank employees. This can lead to unfair outcomes where deserving individuals are overlooked or penalized based on subjective preferences rather than objective performance metrics.

Stack ranking amplifies the potential for biases to affect decision-making throughout the evaluation process. From the selection of performance criteria to the interpretation of results, subjective biases can creep into various stages. For example, if certain demographics or personality traits align more closely with a manager's preferences, it may result in disproportionate rankings that do not reflect true performance. Biases can also manifest in the form of halo or horn effects, where an overall positive or negative impression of an employee influences the entire ranking rather than considering specific performance indicators.

The subjectivity of stack ranking undermines its credibility and erodes trust within the organization. Employees may perceive the ranking process as unfair or arbitrary, leading to a loss of confidence in the evaluation system. When employees believe that their rankings are influenced by subjective biases rather than objective assessments, it can create a sense of disillusionment and frustration. This, in turn, can harm employee engagement, job satisfaction, and overall morale, impacting organizational culture and productivity.

How Stack Ranking Has a Negative Impact on Employee Morale

The competitive nature of stack ranking can have a detrimental effect on employee morale. When employees are constantly ranked against their peers, it creates a sense of insecurity and uncertainty about their future within the organization. The fear of falling into a lower rank or being labeled as a low performer can lead to heightened stress and anxiety among employees. This, in turn, negatively impacts their overall job satisfaction and psychological well-being.

Stack ranking fosters a culture of comparison and internal competition, where employees may perceive their colleagues as threats to their own success. This can erode teamwork and collaboration as individuals prioritize their personal rankings over collective achievements. Instead of working together towards shared goals, employees may become more self-focused, potentially leading to a decline in camaraderie and a breakdown in communication within teams.

The consequences of stack ranking, such as limited rewards or career advancement opportunities for low performers, can create a sense of demotivation and disengagement. Employees who consistently find themselves in lower ranks may experience a loss of motivation to improve their performance, as they may perceive the system as stacked against them. This can result in decreased productivity, decreased commitment to the organization, and a higher likelihood of turnover.

Stack ranking can also lead to a perception of unfairness and favoritism. Employees who believe that the rankings are influenced by subjective biases or preferential treatment may become disillusioned and harbor negative feelings towards the organization. The perception of an unfair evaluation system can create a toxic work environment, where trust

How Stack Ranking Focuses on Short-Term Performance

Stack ranking tends to prioritize short-term performance over long-term growth and development. With the focus on achieving immediate results and outperforming peers, employees may be inclined to prioritize activities that yield quick wins or short-term gains. This can lead to a lack of emphasis on long-term strategic initiatives, innovation, and investment in professional development. By incentivizing short-term performance, stack ranking may hinder the organization's ability to adapt, innovate, and thrive in the long run.

The pressure to meet performance targets and rank higher can lead employees to engage in behaviors that prioritize short-term gains at the expense of quality or ethical considerations. This can result in rushed decision-making, corner-cutting, or sacrificing long-term sustainability for short-term wins. Such actions can compromise the organization's reputation, customer satisfaction, and overall success in the long term.

Stack ranking may discourage employees from taking risks or pursuing innovative ideas that may not yield immediate tangible results. The fear of failure and its potential impact on rankings can create a risk-averse culture where employees are discouraged from exploring new approaches or pushing boundaries. This stifles creativity, hampers innovation, and limits the organization's ability to adapt to evolving market conditions or seize new opportunities.

By primarily focusing on short-term performance, stack ranking can neglect the importance of continuous improvement and learning. Instead of investing time in professional development, skill-building, or strategic initiatives, employees may feel compelled to prioritize tasks that will directly contribute to their ranking. This can result in a lack of emphasis on employee growth, hindering the organization's ability to develop a skilled and adaptable workforce.

How Stack Ranking Damages Employee-Manager Relationships

Stack ranking can damage employee-manager relationships by introducing a sense of mistrust and strained communication. Employees may perceive the ranking process as arbitrary or unfair, especially if they believe that subjective biases influence the evaluations. This perception can erode trust in managers and lead to a breakdown in open and honest communication. Employees may become hesitant to share their challenges, seek guidance, or provide feedback, fearing that it may negatively impact their rankings or how they are perceived by their managers.

The competitive nature of stack ranking can create a divide between employees and managers. Instead of fostering a supportive and collaborative relationship, stack ranking sets up a dynamic where managers are seen as judges or gatekeepers of rewards and career advancement. This shift in power dynamics can lead to strained interactions, with employees feeling the need to "impress" their managers rather than engaging in open and constructive dialogue. The focus on individual performance and rankings can overshadow the importance of coaching, mentorship, and development-oriented relationships between managers and their team members.

Stack ranking can create a perception of favoritism or bias, damaging employee-manager relationships. If employees perceive that their rankings are influenced by personal relationships, likeability, or unconscious biases, it can breed resentment and erode trust. The perception of unfairness can negatively impact the working relationship, with employees feeling undervalued or overlooked based on factors outside their control. This can lead to decreased engagement, job satisfaction, and loyalty to the organization.

The pressure and stress associated with stack ranking can strain employee-manager relationships. Employees may feel heightened anxiety about their performance and rankings, which can impact their interactions with managers. The fear of negative consequences or being labeled as a low performer can create tension and hinder open communication. This can result in a less supportive and collaborative work environment, impeding the ability of managers to provide effective guidance and support to their teams.

How Stack Ranking Adversely Affects Diversity and Inclusion

Stack ranking can have adverse effects on diversity and inclusion efforts within an organization. The subjective nature of stack ranking evaluations leaves room for unconscious biases to influence the rankings. Biases related to race, gender, age, or other protected characteristics can inadvertently impact the evaluations, leading to disparities in rankings and opportunities. This can perpetuate systemic inequities and hinder efforts to build a diverse and inclusive workforce.

The competitive nature of stack ranking can create an environment where employees from underrepresented groups feel marginalized or overlooked. Biases or stereotypes may influence managers' perceptions and rankings, leading to unequal treatment and limited advancement opportunities for individuals from diverse backgrounds. This can result in a lack of representation and hinder the organization's ability to harness the full potential and talent of its diverse workforce.

Stack ranking may discourage diversity of thought and inhibit the expression of alternative perspectives. When employees feel that their ideas and contributions are being evaluated against a narrow set of criteria, they may be hesitant to bring forward innovative or unconventional ideas. This can stifle creativity, limit problem-solving approaches, and hinder the organization's ability to adapt and thrive in a rapidly changing world.

The perception of unfairness in the stack ranking process can create a sense of disillusionment among employees from underrepresented groups. If they believe that their rankings are influenced by biases rather than objective evaluations, it can erode trust and confidence in the organization. This can lead to decreased engagement, higher turnover rates among diverse talent, and difficulties in attracting a diverse pool of candidates.

Adverse impacts on diversity and inclusion can harm the organization's reputation and relationships with external stakeholders. In today's socially conscious environment, companies that are not actively promoting diversity and inclusion face scrutiny from customers, investors, and the public. Stack ranking, when perceived as perpetuating biases or hindering diversity, can tarnish the organization's image and create reputational risks.

The Alternative to Stack Ranking

An effective alternative to stack ranking is a performance management approach that emphasizes continuous feedback, goal setting, and individual development. This alternative approach focuses on nurturing a growth-oriented culture and supporting employees in their professional growth. Here are some key elements of this alternative approach:

• Continuous Feedback and Coaching: Instead of relying on an annual or periodic ranking system, organizations can encourage ongoing feedback and coaching conversations between managers and employees. Regular check-ins provide opportunities to discuss performance, set goals, address challenges, and provide guidance for improvement. This approach allows for timely recognition of achievements, targeted support for development areas, and promotes a collaborative relationship between managers and employees.
• Goal Setting and Alignment: Setting clear and meaningful goals that align with individual and organizational objectives is crucial for driving performance and growth. This alternative approach involves collaborative goal setting, where employees have a voice in defining their goals and understanding how they contribute to the overall success of the organization. Regular progress reviews and adjustments ensure alignment, accountability, and continuous improvement.
• Development and Growth Opportunities: Fostering employee development and growth is vital for enhancing performance and engagement. Organizations can provide resources, training, and opportunities for employees to acquire new skills, expand their knowledge, and take on new challenges. This approach prioritizes individual development plans and career pathways, enabling employees to pursue their professional aspirations while contributing to the organization's success.
• 360-Degree Feedback and Evaluation: Implementing a multi-source feedback system, where employees receive input from peers, subordinates, and supervisors, provides a comprehensive and well-rounded assessment of performance. This approach reduces biases, encourages a more objective evaluation process, and offers a holistic view of an employee's contributions, strengths, and areas for improvement.
• Recognition and Rewards: Instead of pitting employees against each other, this alternative approach emphasizes recognizing and rewarding individual achievements and contributions based on objective performance criteria. Rewards can be tailored to acknowledge effort, innovation, collaboration, and other desired behaviors, fostering a positive and inclusive work environment.
  

By adopting this alternative performance management approach, organizations can foster a culture of continuous learning, collaboration, and individual growth. This approach shifts the focus from comparing and ranking employees to developing their skills, aligning their goals, and supporting their ongoing success within the organization.

Use AllVoices to Improve Employee Relations

To ensure the voice of the employee is heard and valued, organizations can leverage tools and platforms like AllVoices. AllVoices is an all-in-one employee relations platform designed to provide employees with a safe and confidential space to share their concerns, feedback, and experiences.