Uber lawsuit says ‘stack ranking’ evaluation is discriminatory

Under stack ranking evaluations, your colleagues become your competitors, and the workplace transforms into a battleground to curry your manager’s favor and win a higher performance ranking than your peer.

It’s a controversial performance review system, also known as the “rank and yank,” that was popularized by GE CEO Jack Welch in the 1980s (GE phased out the practice in the mid-2000s). Even if two employees’ performances are equivalent, managers must rank all of their employees along a predetermined formula, so that no one’s performance can be equal to another’s.

A new lawsuit from a former Uber engineer, Roxana Del Toro Lopez, is alleging that this ranking system is discriminatory toward women employees and that the lower rankings result in lower pay and fewer promotions.

The research on ranking

When bosses must choose between their employees, gender bias research finds that managers’ unconscious biases will get used to grade employees. A Harvard Law School study found that women are 1.4 times more likely to receive subjective feedback in their performance reviews that have nothing to do with how well they can do the job. A male worker’s careful thoughtfulness was seen as “analysis paralysis” in his female colleague, for instance.

“The problem with forced ranking is that it forces managers to make artificial distinctions between employees that don’t reflect performance,” Del Toro Lopez’s lawyer told Bloomberg News. Uber has not commented on the lawsuit, but it recently overhauled its performance review system after ex-Uber engineer Susan Fowler wrote a blog post alleging workplace sexual harassment and management issues. As part of that overhaul, Uber employees are no longer ranked or rated along hard numbers, and goals and feedback are now emphasized. Uber’s new senior vice-president for leadership and strategy Frances Frei said that the goal is now to make feedback a tool for improvement, not one for judgment.

“It’s an irresponsible act for me to give feedback to someone if I’m not trying to have them improve,” Frei said.

When employers stack rank, teams turn on each other

When we know we’re being ranked, we feel threatened by the loss of control and autonomy over our careers. Under that stress, ranking encourages employees to focus on “trying to look good instead of trying to get better,” David Rock, author of Your Brain at Work, says about ranked performance evaluations.

Although reportedly one-third of Fortune 1000 companies still use stacked rankings, more companies are turning against the practice. Microsoft killed its stacked ranking system in 2013, and the system’s demise offers a case study of how a management tool that’s meant to be motivating can end up holding teams back.

When you know you’re going to be judged alongside the people working next to you, employees lose an incentive to collaborate and share valuable information. Microsoft engineers reported sabotaging their co-workers projects to ensure that they would come out on top. Anxious employees lost their drive to work on the best teams. Why should I work with a group of talented engineers when that could risk my ranking as the best in my group? Under stacked ranking, teams can only have one superstar.

Stacked ranking can not only kill employee morale, it can also hurt organizational outcomes. Microsoft employees reported focusing on short-term projects that would make them look good in reviews over riskier longer-term projects needed to drive innovation.

“People planned their days and their years around the review, rather than around products,” a Microsoft software designer told Vanity Fair. “You really had to focus on the six-month performance, rather than on doing what was right for the company.”