Stack Ranking Systems Slam Into Tech Workers in Tough Labor Market

  • Tech workers who survived layoffs this year will likely face tougher performance reviews next year.
  • Salesforce and Meta are asking managers to tag 10% to 15% of people on teams as low performers.
  • CEOs may see industry-wide turmoil as a chance to “spring clean” workers considered “dead weight.”

For Silicon Valley’s army of workers still clinging to their jobs, reaching the end of 2022 will feel like a relief after a year that saw 150,000 tech workers laid off. But they might not be out of the woods just yet.

From Meta to Salesforce, tech firms across the board are looking to tighten their belts further in 2023 using a tactic unpopular with workers: stack ranking.

Stack ranking evaluates employee performance by comparing them and deeming a certain percentage of workers as top performers and a certain percent as low performing.

Demanding that managers find a larger percentage of their reports as low performers has already been used by tech firms as part of “quiet layoffs” to cut costs, avoiding the PR pain of large-scale layoffs by managing out people through performance reviews and internal restructuring ,

But a tougher labor market for tech workers Silicon Valley CEOs are much more comfortable using stack ranking to put more people into a low-performance bucket, in a reversal of power as management gains the upper hand over labor after years of competing for workers.

CEOs see a chance to ‘spring clean’

For Stevie Buckley, the cofounder of Talent Stuff, a hiring platform for tech firms, it’s unsurprising to see firms get more aggressive about performance during times of economic turmoil.

“In these scenarios where there’s an industry-wide impact in terms of mass redundancies and layoffs, it’s pretty standard practice to use that opportunity as almost — this is a horrific term — but ultimately a ‘spring clean’ of your employee roster,” he said.

Buckley noted that scenarios like this make it easier for companies to offer increasingly vague notions of what counts as low performance.

Employees who are “proving to be difficult” or “dead weight” among senior management, he said, can be added to that category as “there’s question marks over the value you’re getting” from those employees.

How Silicon Valley is stacking up workers

In November, Insider reported that the software giant Salesforce had implemented a quota system that gave sales teams “unrealistic goals and difficult accounts,” with insiders saying they felt set up for failure.

Salesforce contended in November that its “sales performance process drives accountability,” and that could “lead to some leaving the business.”

At the start of December, Salesforce managers were reportedly asked to update a ranking of their bottom 10% of employees, despite laying off hundreds of workers last month.

Meta has also put performance front and center. The company told directors to identify 15% of their teams as “needs support” in October, shortly before Meta laid off 11,000 people in November.

Now the company wants to identify more low performers. Last week, Insider reported that the number of people finding themselves in the lowest-performance categories come annual performance reviews in January will roughly double.

Snap, the parent company of Snapchat, also used performance reviews prior to its layoffs. Managers were told to place 10% or more of their staff on performance-improvement plans at the beginning of summer. At the end of August, Snap cut roughly 20% of its full-time workforce.

Even Google’s parent company, Alphabet, seen by many as the cushiest company to work for in Big Tech, has signaled it will be stepping up its performance reviews. Under a new system introduced this year, up to 6% of workers could be given a bad performance rating, up from 2% under the previous system.

Buckley said those who remain will likely have to meet higher expectations — Salesforce teams, for example, have been given higher sales targets.

“If you’ve made a bunch of people redundant, it can be very common to then raise targets,” he said. “That gives you the opportunity to include others into that low-performance category because you’ve arbitrarily raised the bar in terms of what’s expected.”

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