Following a string of PR nightmares (most recently firing Senior VP of Engineering Amit Singhal after he failed to disclose sexual harassment allegations from his time at Google) Uber continues to face scrutiny over its highly results-driven employee culture.
And recently, the focus has shifted to how the company quantifies its 14 core values via a controversial ranking system.
It’s called “stack ranking”
Pioneered by former GE CEO Jack Welch, the performance review process (or “perf,” as it’s known by Uber employees) has managers rank employees twice a year on a one-to-five scale.
Fives, as one employee puts it, are reserved for “Jesus or Travis,” while ones and twos are put on performance improvement plans (aka, told to get their sh*t together or get booted).
This results in a competitive “20-70-10” bell curve in which the bottom 10% are at risk of being fired, while the top 20% reap the benefits of lucrative equity bonuses. So, as critics say, top employees’ success comes at the expense of someone else.
Hey, they don’t call it “rank and yank” for nothing…
While those who oppose this kind of system warn that it creates a dog-eat-dog work culture based on often-subjective management reviews, Welch maintains that, if done right, it’s the “kindest, fairest evaluation system out there.”
He views a company as a team — and a team with the best players wins.
To that end, the system of differentiation is built to “[Reward] stars in an outsized way that is both soul-satisfying and financially satisfying; [develop] “the middle 70” with training and coaching; and [move] out bottom-tier performers so better talent can be brought in.”
Welch doesn’t think this is too cutthroat, either…
In fact, he sees the “stack ranking” system as being empowering because it allows employees to control their own destinies.
For example, instead of being blindsided by a manager who’s been letting them slide for the past decade “in the name of kindness,” underperforming employees always know where they stand, and can take steps to improve before they get axed.
Which sounds good in theory…
But as Uber found out, it’s a lot harder in practice. Employees have said that managers still practiced favoritism in rankings and left employees with no option to improve their performance.
And they’re not alone — GE itself dropped stack ranking a decade ago, while other companies like Microsoft have notably departed from it to improve teamwork and retain talent.
So, maybe it’s time for Uber to do the same and build a team that isn’t made up of individual all-stars, but a bunch of “really good” players that work seamlessly together.
