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Microsoft's nixed worker ranking policy isn't all bad

Microsoft is getting rid of a controversial employee ranking system hoping to encourage the development of more products consumers want, according to the company.

"These changes will encourage greater speed, creativity and teamwork to help us bring innovation to market faster and better serve our customers," a Microsoft spokesperson told CNBC.

The nixed system, which evaluated employees on a curve, identified the top performers, the lowest performers and the employees that fall into the middle of that spectrum. In some cases, the worst performers could be fired, and the fear of falling into that could hurt company morale and potentially pit employees against each other.

The Microsoft name is displayed on a sign outside a building on the company's campus in Redmond, Washington.
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The Microsoft name is displayed on a sign outside a building on the company's campus in Redmond, Washington.

"It's really important, I think, to judge on a curve to know who your top performers are, but on the other hand I think it could wind up making a lot employees devalued and that's really not a good thing when you're trying to foster a culture of innovation," said Mark Spoonauer, editor-in-chief of Laptopmag.com however.

If the ranking system is implemented correctly, employees who could use some improvement would know who they are and how to improve, Spoonauer said.

"It's the execution of this that's key. Being transparent without fostering a culture of fear," he added.

By CNBC's Althea Chang.