Many companies have used the stack rating system as a method to weed out unproductive and unfit employees, such as Microsoft and Yahoo!, but many are now opposed to this system. Microsoft, who used the system for ten years, decided to drop it at the beginning of the year because they were unhappy with the result it had on the company culture. Employees felt that it created a cannibalistic culture that, “encouraged people to back stab their co-workers.” This left employees feeling helpless, knowing that if they had two bad reviews then they would have their position viewed and possibly fired, and also knowing that someone had to get a bad review every time in order to maintain the bell curve requirement of the stack rating system.

Yahoo!, who still uses this system, has had to layoff 600 people in the past couple weeks because of the Stack Rating’s structure. Managers are forced to give people negative reviews even if they don’t feel like they deserve it because they have to give the review to someone.

This type of system creates a negative environment to work in because it takes the power away from the employees, making them feel helpless about their jobs, which demotivates them and prevents them from doing their best work for the company.

http://www.infoq.com/news/2013/11/stack-ranking-microsoft-yahoo