Attacking Stack Ranking

Vanity Fair's August issue will feature an explosive article titled "Microsoft's Lost Decade." It takes Steve Ballmer, Bill Gates, and other Microsoft executives to task for the endless bonehead mistakes they have made over the past decade.
Although gripes about Microsoft can be found consistently throughout the tech press, the impact of this article will be profound since it will consolidate employee dissatisfaction at the company, something seldom done except in blogs.
The complaints will eventually spread to other companies that also employ an idiotic personnel grading system called stack ranking. I've known about the system for years but was unfamiliar with its origins as a popular method of evaluating employees. It is detailed best by Stephen Gall in his paper called "Human Resource Management" done at Walden University. Gall specifically looks at Microsoft's sketchy personnel management practices.
In a nutshell, employees are ranked on a zero to four scale, four being the best. They rank each other and their bosses. For all practical purposes, the person with the lowest average score gets fired.
Over time, because people at Microsoft are recruited for their brainpower, the employees have managed to devote all their time to gaming the system rather than doing any real work. The company has been in the tank insofar as creativity is concerned for more than a decade because the stack ranking is arbitrary. If you are about to shine as a creative thinker, you get low rankings from your peers because you would otherwise cause them to receive lower scores.
Oh, as an aside, Steve Gall's paper blasting the Microsoft practice was written in 2005, so the HR community was warned in advance and has done nothing to change the practice.
The entire process is a sick, Orwellian one that was popularized by Jack Welch and used at General Electric. Welch, one of the great self-promoting blowhards of the last century, wanted to make sure that the "underachieving" bottom 10 percent of the company got routinely fired no matter what.
One has to assume that GE's poor performance in the market and the dreadful lack of creativity at NBC is all the result of this onerous practice. The worst case scenario for stack ranking was Enron. It managed to create a criminal class of employees.
Forced ranking, a version of the process, is promoted in the book Forced Ranking: Making Performance Management Work by Dick Grote. After you read Gall's paper, I suggest you read an excerpt here.
I'd wager that more than 70 percent of all large American corporations employ this practice in one form or another. I was told years ago that the whole process was streamlined by SAP and put into place effortlessly.
According to Gall:
The stack rank system creates an environment that is not conducive to high employee moral and team performance. By ranking employees there becomes a sub-optimization in terms of team unity because it singles-out the performance of some at the expense of those who provide the daily support that is necessary for the team effort.

The good news is that legal analysts are looking at the practice more closely and finding it in violation of far too many labor laws. This may end it as an HR tool. That said, a scan of various HR publications finds that it is often disguised as something less burdensome.
In the meantime, we should look at corporations individually and see which ones use the process and which ones do not. I can assure you that the ones that reject it will be more competitive and creative.
I would appreciate an email from you if your company uses the process. You can reach me at john@dvorak.org.
The reaction to the Vanity Fair piece, I can assure you, will finally shed some light on all this and earn Microsoft and other American corporations plenty of unwanted attention.