The Manager's Handbook

3Instant Performance Feedback

I absolutely believe that people, unless coached, never reach their maximum potential.

—Bob Nardelli, former CEO of Home Depot and Chrysler

When Steve Ballmer was CEO of Microsoft, he ran an employee evaluation program called “stack ranking.” Every year, each business unit scored its employees against one another, rating them top to bottom. Stack ranking is thought to be one of the most destructive processes to happen at Microsoft.¹ As one developer noted, “If you were on a team of 10 people, you walked in the first day knowing that no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review.” A similar system at General Electric was called “rank and yank” because those graded in the bottom 10% would be expected to resign or face dismissal.

Microsoft and GE were working off a 2,000‐year‐old feedback technique that, according to the Harvard Business Review, “drives neither employee engagement nor high performance.”² These overly systematic approaches allow company leaders to imagine they have fulfilled their coaching responsibilities, while providing little in the way of useful feedback. Their employees feel the same way. A measly 14% of surveyed employees strongly agreed that their performance reviews helped them improve.

Classic performance reviews don't work because we're bad at rating one another along rigid dimensions. We can hardly capture ...