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Micron using ‘stacked ranking’ to shed staff

photo of sanjay mehrotra, politicians, and former micron executives

Micron CEO Sanjay Mehrotra led attendees in a rousing “Go Micron” cheer at the company’s 40th anniversary celebration on Oct. 18. Photo by Sharon Fisher.

Just weeks after its 40th anniversary celebration, Micron is shedding some employees, but the company said it wasn’t a layoff.

A number of people identifying themselves as Micron employees have been posting anonymously in recent days to employee websites such as Glassdoor, TheLayoff and Indeed, saying they had been reviewed and presented with a performance improvement plan. They could choose to try to comply with the performance improvement plan within 90 days or take severance, they reported.

“Micron is growing in many locations, including Boise, and we continue to look for top talent and outstanding team members to join Micron,” said company spokesman Robert Manetta. “At the same time, Micron is evolving its talent management discipline to better align with industry best practices. These are minor adjustments designed to help ensure Micron attracts and maintains the industry’s highest performing and most engaged workforce. Specifically, the company is offering every employee with a low performance rating the opportunity to stay at Micron with the help of a performance support plan, tailored to each employee. If an employee decides he/she is not interested in this option, Micron offers an alternative to instead select an incentivized exit in eligible countries. This performance management process is not an involuntary layoff – it is entirely optional and completely at each employee’s discretion whether to choose to stay or depart.”

Such performance measurement systems have been known as stacked ranking, bell curve or “rank and yank,” depending on how people feel about them. They are considered to have begun with Jack Welch, CEO of General Electric, and have been used by a number of other companies, including the technology industry.

photo of rick ritter

Rick Ritter

“Stacked ranking means getting rid of the deadwood,” said Rick Ritter, lab director for Meridian incubator New Ventures Lab and former president and CEO of Idaho TechConnect. “I think that most large companies need to do something like that from time to time. My understanding is that Micron is also bringing in people that fit with where they want to head in the future.  The two approaches together probably mean good things for Micron’s future.”

But not everyone agrees. Detractors of the stacked ranking system – which requires managers to pick out a certain percentage of employees, on the order of 8 to 10 percent, as “low performing” and needing to improve or be let go – say that it obstructs collaboration because employees are afraid to make other employees look good. In some cases, star employees even resist being put on the same teams as other star employees. A number of stacked ranking proponents, such as Microsoft, Yahoo and General Electric itself, have done away with the practice.

“I’ve seen it in companies that do annual and semiannual reviews,” said Daniel Bobinski, a Boise-based human resources consultant and author of “Creating Passion-driven Teams: How to Stop Micromanaging and Motivate People to Top Performance.” “All the employees hated it. The managers hated it.”

Annual and semiannual performance reviews in general are ineffective because it’s too hard for employees and managers to remember what the employee did a year ago, he said. “’What was my employee doing last January again?’ Who remembers that?”

Instead, Bobinski recommended that managers and employees come up with a mutual list of three to five measurable goals – “make 25 phone calls a day” or “knock on 20 doors a week,” as opposed to “make more sales” – and meet every two to three months to discuss the progress toward those goals.

A stacked ranking system where a manager had to define one out of 10 employees as low-performing is too limiting, Bobinski said. “What if five of them are poor?” he said. “What if I have five of them I need to get rid of because they’re not performing? That’s why I like performance-based management, because each person gets rated on their goals.”

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One comment

  1. I totally agree with Dan Bobinski. Stack-ranking fell out of favor for very good reasons years ago. That is not to say that employers cannot reduce poor or ill-fitting performers from time to time. It takes performance-based (or skill-based) selection that is well documented. I’m sorry that Micron has chosen the stack ranking method — they’ll find their folks to reduce, all right, but this is not the best practice any longer.