Yahoo: Two Wrongs Don’t Make a Right

I can’t believe this. Yahoo is now ranking employees on the curve! If it was April I would think it was an April Fools’ joke. Who is advising Marissa Mayer? At a time when Yahoo needs everyone to give it their all, someone has convinced her that ranking employees on the curve is a way to motivate them. Is there no one on her executive staff who has any knowledge of human behavior?

At a time when I have been advising companies to scrap the appraisal process altogether, Yahoo is doubling down on it. Most companies know that forced ranking systems don’t work and movement is certainly away from them. I have discussed the performance appraisal process in some detail in my “OOPs” book, so I won’t do it again here, but as I have said about the appraisal system many times, there are cheaper ways to upset people.

I would like anyone to show me one piece of solid research that demonstrates that ranking and the appraisal process improves performance. I don’t know one, but I do know enough about the laws of behavior to know that the process violates most of them and is a big waste of time and money. I also know that if Yahoo is having performance problems, it is a leadership and management problem, not an employee one. Leadership creates the environment where performance takes place. That environment can either facilitate or impede performance. Yahoo seems to be stuck on the latter. First, eliminating work from home and now this. Two wrongs don’t make a right.

I predict that Yahoo management will bring in some initiative that will sugarcoat what they have done, but in the end even though “the sugar makes the medicine go down,” it is the medicine that has the impact, not the sugar. This medicine will not cure the company’s ills, but will instead add to them. You can quote me on that. There is a better way, but things may have to get worse at Yahoo before they get better.

For a more detailed explanation of the perils of ranking, listen to this short podcast.