Stack ranking performance review blows up in Marissa Mayer's face at Yahoo

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Around the time proponents of stack ranking like Microsoft and GE were ditching the system in favor of more employee-friendly management strategies, newly appointed Yahoo CEO Marissa Mayer embraced the strategy with the unveiling of her quarterly performance-review (QPR) system.

Shortly after joining the company in 2012, she implemented the employee-performance-review process, which had managers score their employees and distribute them into "greatly exceeds," "exceeds," "achieves," "occasionally misses," and "misses" categories, with a target percentage of employees to be distributed into each.

Now, as Mayer comes under fire from investors over Yahoo's management and insufficient turnaround, Yahoo also has a lawsuit to contend with surrounding its controversial QPR system.

In the lawsuit filed on Monday, former Yahoo editor Gregory Anderson accuses Yahoo of implementing its performance-review system knowing that stack ranking had been criticized and rejected by larger employers because it was "subject to abuse, often resulted in claims of discrimination, and needed to be closely monitored in application and effect."

He says the rules implementing the QPR process were vaguely drawn, were communicated on a need-to-know basis, differed from department to department, and would change quarterly to achieve headcount-reduction targets.

Anderson further alleges that even if all employees on a team were performing well or at the same level, managers were required to place some of them in "occasionally misses" and "misses" buckets, resulting in good employees being let go.

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