The Pitch
Are you "Stack Ranking" your reps by % to quota? In the competitive arena of sales, stack ranking can be as contentious as it is popular. This method, where sales managers rank reps by their performance relative to quota, is often displayed in team meetings. It's a practice that can ignite a fire of competition and ambition, but it's not without its potential pitfalls. According to a study by the Vanderbilt University, while competition can increase effort and performance, it can also lead to unethical behavior if not managed carefully. The balance between healthy competition and potential demotivation is delicate. This article will dissect the pros and cons of stack ranking and explore how it can be a tool for motivation or a recipe for discord, depending on the team's culture.
Fosters Competition
The drive to be the best is a natural motivator in sales. Stack ranking taps into this competitive spirit by pitting sales reps against each other in a race to the top. It's a practice that can lead to increased effort, sharpened focus, and a desire to excel. When managed correctly, fostering competition can lead to significant performance improvements. A study by the American Psychological Association found that competition increases psychological arousal, which can improve performance. However, this only holds when the competition is perceived as fair and achievable. The key to leveraging stack ranking effectively is to ensure that it encourages a positive, competitive spirit that aligns with the team's values and goals.
Motivates Reps That Are Close to Goal
For those hovering near their sales targets, stack ranking can be the nudge they need to go the extra mile. It's a visual representation of how close they are to their goals and can be the catalyst for a final push. This can be especially effective toward the end of a sales quarter when the pressure is on to meet and exceed targets. The motivation derived from stack ranking in these instances can be palpable, as reps strive not just to meet their quotas but to surpass their peers. The effectiveness of this approach is backed by research from the Journal of Personality and Social Psychology, which suggests that near-misses can motivate individuals to persist in their efforts.
Recognizes Top Performers
Recognition is a powerful tool in a sales manager's arsenal. Stack ranking serves as a public acknowledgment of the top performers' hard work and success. It's a way to say, 'We see what you're achieving, and we value it.' This recognition can boost morale and drive for the high achievers and set a benchmark for the rest of the team. The importance of recognition in the workplace is well-documented, with a Gallup study showing that it leads to increased employee engagement, satisfaction, and retention. However, it's crucial that this recognition doesn't overshadow the collective achievements of the team or the contributions of those who may not be at the top of the rankings but are still performing well.
Someone Will Be in Last Place
A significant downside to stack ranking is that for every top performer, there is someone at the bottom. This can be a tough pill to swallow, especially for those who are giving their all but not seeing the same results. The psychological impact of being ranked last can be damaging, leading to decreased motivation and self-esteem. The key is to approach this sensitively and ensure that those at the bottom are not left to flounder but are given the support and guidance they need to improve. According to the Harvard Business Review, the demotivating effect of being at the bottom of a ranking can be mitigated by focusing on personal development and setting individual goals that are separate from the stack ranking.
Could Be Seen as Criticizing in Public
Public criticism is a risky strategy. While stack ranking is not intended as a public shaming exercise, it can be perceived as such, especially by those who find themselves consistently at the lower end of the leaderboard. This perception can lead to a culture of fear and resentment, which is counterproductive to team cohesion and performance. A study by the Society for Human Resource Management highlights that public criticism is one of the least effective ways to motivate employees and can lead to a toxic work environment. It's essential for sales managers to provide constructive feedback in a way that is supportive and focused on improvement, rather than criticism.
So What?
The practice of stack ranking in sales teams is a nuanced one, with potential to both drive success and create discord. It can foster a competitive spirit, motivate those close to their goals, and recognize top performers. However, it can also demoralize those at the bottom and be perceived as public criticism. The key is understanding your team's culture and dynamics and using stack ranking judiciously to ensure it serves as a motivator rather than a deterrent.
Next Steps
✅ Evaluate team's response to competition.
✅ Balance recognition with team unity.
✅ Offer support to lower-ranked reps.
✅ Use stack ranking selectively.
✅ Monitor the impact on team morale.
Closed Won!
Stack ranking can be a powerful tool in a sales manager's toolkit, but it's not without its challenges. It's essential to consider the individual dynamics of your team and to use stack ranking in a way that promotes a healthy, competitive environment.
What's your perspective on stack ranking in sales? Does it enhance performance or hinder team spirit? Share your experiences and join the conversation below.