Goldman Sachs Dumps Numerical-Ranking System for Employees
Well, I can&#x27;t read the article because I&#x27;ve chosen to focus my newspaper subscriptions on other, better, eh, &#x27;peach-colored&#x27; newspapers..  but I worked in investment banking in IT for a number of years.   Pretty much almost 10.<p>I&#x27;ve been thinking about stack ranking for a long time.  In one place I worked, a large rival of Goldman, you would be ranked (secretly) on a curve, typically from 1-5.  If you were the manager of a group of, say, 6 people, you couldn&#x27;t just give everyone a 5 or a 1.  You had to even it out, pepper in a few different numbers in that range.  Maybe you had one 4 or one 5, say.  This would go up to your manager, who would, in addition to rating you with your peers, would take a look at what you rates your employees and &#x27;adjust&#x27;, ensuring that the curve is adhered to, maybe moving numbers up or down depending on how they felt about your employees and also as compared to other groups (since it&#x27;s a hierachy, a pyramid where each layer up managers more groupings of people).<p>This system was applied to the layoff selection (1&#x27;s are out, some 2&#x27;s are downgraded to 1&#x27;s as the rankings made their way up the chain of command), and may have applied to bonus system as well (which is more complex).   There were layoffs at least yearly, most years.  Goldman is worse because the reputation was to always cull the bottom 5%, and I heard 10%, of staff yearly and (in good economic times) get a new fresh set of people not long after that.<p>Regardless, the takeaways of a system like this is that, regardless of your INDIVIDUAL performance, what matters is your performance relative to your peers.  There are few issues with this.<p>The first issue with this is that the ranking system like above, or any ranking system, makes a lot more sense when you&#x27;re in a role that has tangibly quantifiable measurements.  For example, sales, or -- especially, in a place like GS -- bond or equity or other trading.  In either one, if I make the company 1M, and you make it 1.2M, it&#x27;s clear you added more value.<p>Well, what about IT staff?  Is it lines of code?  No, of course not.  So there are these nebulous, subjective measurements pretending to be something more useful than they are.  Performance reviews, the impact&#x2F;importance of the projects you completed (which you didn&#x27;t even get to CHOOSE, in most cases), and (at the place I worked) items like letters from senior managers about you that were positive, all counted.<p>The second issue is that competition doesn&#x27;t necessarily make the work done better or more efficiently.  The worst part for me was competing with people on my team.  Instead of the team competing with other teams (if we want to ideologically just adopt the notion that competition makes everything more efficient and effective [which I think is overstated heavily], at least team competitions are a little better), we would compete with one another.<p>There are two ways to compete.  I work harder, or better, or perform better than you.   The second way is, we perform the same, or I perform the same, but I undercut you somehow.  What&#x27;s an example of undercutting?  Well, let&#x27;s say that on conference calls when it was your turn to speak I&#x27;d take knowledge about your project and use that to show that I know more publicly, or let&#x27;s say that you undercut me by taking over my project and that of others, to show the boss how smart you are, etc.  Most managers are so busy themselves that they don&#x27;t have time to notice these things, which seem like petty infighting &#x2F; childishness in their eyes.  I saw the &#x27;project takeover&#x27; scenario happen everywhere I&#x27;ve worked in these competitive environments.  I saw one guy take over a bunch of people&#x27;s projects, find himself overworked, complained, and got himself staff to work under him.<p>Hey, it&#x27;s not easy to figure out what to do with regards to ranking, or whether to do it at all.  When you&#x27;re a full-time IT worker or professional in America, you get a salary, but it kind of doesn&#x27;t say your hours in your contract;  or if it does and is (rarely) enforced, at the end of the day in a competitive environment it&#x27;s not fair if some people have to pull the weight of others.  So there has to be some differentiator.  On the other hand, what I&#x27;ve seen in IT is a downward spiral of misery.  There&#x27;s always someone on the team who puts in 60 hours a week so he can show how smart he&#x2F;she is, trying to get that bonus or promotion above you.<p>And it&#x27;s entirely possible that the above is more pronounced in the large, Northeastern American city (and industry) I live and work in.