In the 1980s Jack Welch introduced a ranking system at General Electric. The top 20 percent of employees were the most productive, and the middle 70 percent did adequate work. The bottom 10 percent were to be fired. The practice became known as “rank and yank.” Welch called it “differentiation” and defended it. “If you want teamwork, you identify it as a value.”
Microsoft used a version called stack ranking. Each employee received a single rating from 1 to 5. The rating “triggered increases in merit pay, bonuses and the awarding of restricted stock units.” In November 2013 Microsoft’s head of human resources, Lisa Brummel, ended the system in an email to employees. “No more curve,” she wrote.