IBM Consulting institutes stack ranking for employee performance

Controversial performance ranking practice instituted as IBM closes $6.4bn acquisition of HashiCorp

IBM Consulting announced the global change in an email to all staff at the end of February, moving to stack ranking – a practice that uses a bell curve, deeming a set percentage of employees as high, core and low performers.

According to an email seen by CRN UK, 15 per cent of IBM Consulting employees will be deemed high performers, 70 per cent core and 15 per cent low, corresponding to 2x GDP funding, 1x GDP funding or no GDP funding, respectively, per the company’s “growth driven profit” scheme – an incentive that ties a part of employee compensation to IBM’s annual profit.

The change impacts all of IBM’s consultants globally – approximately 160,000 employees.

IBM dubbed this a “refreshed performance experience” promising to balance “simplicity with speed, resulting in closer alignment between performance and pay.”

“Our data shows we haven’t done a good enough job of differentiating and rewarding top performers, but now, we have an opportunity to change that,” the email states.

“These changes are designed to align and IBMers’ efforts and outputs with the execution of our strategy to be the world’s premier asset-based consultancy and bring greater transparency and rewards to IBM’s incentives programme.”

Despite the controversial nature of stack ranking, which inherently means that even in a high-performing team, a set number of employees will be deemed low performers, the practice has seen a resurgence since 2023, coinciding with two years of increased vendor layoffs.

Tech companies including Meta and Amazon have re-introduced stack ranking, citing it as a more efficient and fair way to measure and improve performance.

A representative for IBM declined to comment further on the change when approached by CRN.

IBM has continued to invest in its consulting offering over the past year, having completed its acquisition of HashiCorp in February.

The buyout enhanced Big Blue’s capabilities across infrastructure and security life-cycle management automation, infrastructure provisioning, multi-cloud management, consulting and artificial intelligence, according to a statement from the company.