Internal Documents Reveal Microsoft's Employee Pay Determination Process, Drawing Comparisons To 'Stack Ranking'

New internal details from Microsoft Corporation MSFT reveal a controversial approach to deciding employee compensation that some insiders liken to the notorious ‘stack ranking’ system.

The tech giant’s review process requires managers to allocate employees across a scale. While a Microsoft spokesperson denies quotas or low-ranking requirements, insiders believe the system essentially mirrors the controversial ‘stack ranking’ practice of the past, Business Insider reported.

Microsoft’s current system involves managers adjusting individual rankings based on the team’s overall performance to prevent too many from achieving the highest ranking and associated pay. This approach has been rolled out alongside a new rating system this year, triggering comparisons to the ‘stack ranking’ system, which was officially abandoned in 2013 due to internal dissatisfaction.

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The company’s rating scale, named the “ManageRewards slider,” ranges from 0 to 200, and managers are instructed not to disclose it or the employees’ scores, referred to as “tick marks.” Microsoft’s review cycle typically starts with performance reviews in April, with compensation notifications in mid-August and payout in September, which fell on the 13th this year.

A Microsoft spokesperson confirmed that managers are encouraged to differentiate but only to reward high performers. They said there are no quotas or requirements for employees to rank low, and managers just have to stay within budget.

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Satya Nadella Microsoft (Created with artificial intelligence on MidJourney and The Art of Pics on Shutterstock)