Stack Ranking

The stack rank was a zero-sum game—one person could only excel by the amount that others were penalized. And it was applied at every level of the organization. Even if you were in a group of three high performers, it was very likely that one of you would be graded Above Average, one Average, and one Below Average. Unless your manager was a prick or an idiot or both, the ordering would reflect your relative skills, but that never came as too much comfort to the hard-working schlub who just wasn’t as good as the other two. . . This was my problem. I had three reports, A, B, and C, and they neatly fit into three categories: C was good, B was great, and A was fantastic.
Slate.com: Tales of an Ex–Microsoft Manager

I can see why, at least on paper, stack ranking has appeal if only because because the process creates an easy visual with which to gauge performance and relatively distribute rewards. In practice, however, stack ranking is invariably demoralizing by turning hard work into a pointless exercise, and should be abandoned immediately by everyone.