The disadvantages seem obvious! but some employers continue to use this system. Why?
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by Liberty791The popularity of stack ranking has declined dramatically over the last several years - largely attributed to negative impact on employee morale as seen in the cases of GE and Microsoft ending the practice. However, there are some advantages of the stack ranking approach to managing employee performance. According to the CEO of Nielsen Holdings, stack ranking forces honest conversations between managers and employees rather than allowing managers to avoid difficult discussions about needed performance improvements (check out the Fortune article). Also, stack ranking provides a structured approach for organizations that need to reduce their workforce - as in the case described by the HBR article on Yahoo's use of the practice (which also goes into the disadvantages of stack ranking).