Dick Grote: “Rank and Yank” at Amazon; Firm Unlikely to Break Cycle of Forced Ranking’s Failure

Artist: michael sloan
By Michael Sloan

The staying power of Dick Grote’s forced ranking is confusing considering its record of failure:

  • Enron
  • Federal Reserve Board
  • General Electric
  • Microsoft
  • Yahoo.
Bucket (rank) Percentage (amounts can be adjusted) Effect
A 20 Lavish rewards, encouragement
B 70 Little to paltry increase
C 10 Pressure to quit, firing

According to an article in the August 16, 2015, New York Times, “Amazon’s Bruising, Thrilling Workplace,” Amazon.com (a sales and marketing organization) can be added to the list. A list of 14 leadership principles, which were developed by the chief executive officer (CEO), Jeff Bezos, fuels a demand of perfection of delivering for the customer with high standards of performance (long hours, being subject to withering criticism and backstabbing–in short the worst behavior humanity can deliver short of physical violence).

Furthermore, the expectation of constant availability without compensation is thoroughly abusive. Amazon does not perform its service for customers for free; thus, Amazon should not expect overtime without compensation. The “salaried” designation is being abused, as low salaries are diluted every minute beyond a 40 hour work week.

I have written posts discussing Grote’s “rank and yank” system. I have a table with discussion of the Amazon system.

Dick Grote’s Forced Ranking Amazon.com (text in quotation marks are from the New York Times article)
Anytime Feedback Tool-allows co-workers to send feedback to one’s manager without the targeted employee’s knowledge. Jeff Bezos, chief executive officer of Amazon, is an investor in Workday, which seeks to bring this “gem” to other organizations which purchase it.
Manager sets tough objectives and expects the employee to figure out how to satisfy the manager’s expectations “Molly Jay, an early member of the Kindle team, said she received high ratings for years. But when she began traveling to care for her father, who was suffering from cancer, and cut back working on nights and weekends, her status changed. She was blocked from transferring to a less pressure-filled job, she said, and her boss told her she was “a problem.” As her father was dying, she took unpaid leave to care for him and never returned to Amazon.

“When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.”

Callibration meeting “Each year, the internal competition culminates at an extended semi-open tournament called an Organization Level Review, where managers debate subordinates’ rankings, assigning and reassigning names to boxes in a matrix projected on the wall. In recent years, other large companies, including Microsoft, General Electric and Accenture Consulting, have dropped the practice — often called stack ranking, or “rank and yank” — in part because it can force managers to get rid of valuable talent just to meet quotas.”

“Preparing is like getting ready for a court case, many supervisors say: To avoid losing good members of their teams — which could spell doom — they must come armed with paper trails to defend the wrongfully accused and incriminate members of competing groups. Or they adopt a strategy of choosing sacrificial lambs to protect more essential players. “You learn how to diplomatically throw people under the bus,” said a marketer who spent six years in the retail division. “It’s a horrible feeling.” “

Unique to Discipline Without Punishment is the final step before an employee’s termination – the Decision Making Leave. The employee is suspended for a day with full pay. On this day he must make a final decision: either solve the problem and commit to fully acceptable performance, or quit and find more satisfying employment somewhere else. Performance Improvement Plan--confidential and among other expectations of the PIP is that the responsibility for bringing performance to the acceptable level rests with the targeted employee.

[Author’s Note: There was a statement from a Master of Business Administration degree holder who said that conflict brings about innovation. It depends how you view innovation. Amazon is a sales and marketing firm, and the innovations discussed in the article relate to sales and marketing not new ideas that can move humanity forward. Each has their place, but it serves as a caution before making broad statements without context.]