Well, managers are trying to make it Gaussian, but underlying is actually power law.
Hey, wait – is employee performance Gaussian distributed?
61–70 of 341 posts
Re: Hey, wait – is employee performance Gaussian distributed?
#62This is very unconvincing. The author already admits one reason why:
> But there are low-performing employees at large corporations; we’ve all seen them. My perspective is that they’re hiring errors. Yes, hiring errors should be addressed, but it’s not clear that there’s an obvious specific percentage of the workforce that is the result of hiring errors.
I think it is clear that we expect a certain percentage of hiring "errors". And that they are not binary but rather a continuum. And that there are lots of other factors like employees who were great when they were hired but stopped caring and are "coasting" or just burnt out, who got promoted or transferred when they shouldn't have been and are bad at their new level/role, and so forth.
The Pareto distribution isn't particularly relevant here, because a hiring process isn't trying to get a whole slice of the overall labor market with clear cutoffs. For any position, it's trying to maximize the performance it can get at a given salary, and we have no reason to expect the errors it makes in under- and over-estimating performance to be anything but relatively symmetric.
So a Gaussian distribution is a far more reasonable assumption than a slice of the Pareto distribution, when you look at the multiplicity of factors involved.
Re: Hey, wait – is employee performance Gaussian distributed?
#63Earlier quoted context omitted.
So you're saying that if you don't think about construct validity and just pick any given metric that can spit out a comparable number across all your different positions and teams, that these metrics have weird distributions? Hmm, I wonder why.
I think it's more charitable to interpret their statement as "for all metrics" rather than "run this experiment once and arbitrarily just chose a single metric". Their statement is a lot more actionable because as much as we've tried to over decades finding an accurate metric to represents performance seems to be an impossible task. A researcher friend at a previous job once mentioned that in grad school he and sever…
Most of the world is ruled by luck. Where you are born, who your parents, how rich they are, who you know, whether or not someone “better” than you applies for the same position, etc. etc.
Ignoring luck or trying to control for it would be a mistake.
Re: Hey, wait – is employee performance Gaussian distributed?
#64Earlier quoted context omitted.
Having a shifted mean doesn't mean they aren't a normal distribution. Not saying they are necessarily, but the anecdote you are providing isn't convincing.
Perhaps, but due to the sampling of the distribution you would likely never know. If 95% of your samples fit in the top 3 bins, you can’t say much at all with certainty. Poisson, Gaussian, binomial, Boltzmann, gamma…
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Re: Hey, wait – is employee performance Gaussian distributed?
#65One of the things I loved about working at Netflix was that the base assumption was that everyone was a top performer. If you weren't a top performer, you were given a severance check.
The analogy we used was a sports team. Pro sports teams have really good players and great players. Some people are superstars, but unless you're at least really really good you're not on the team.
Performance and compensation were completely separate, which was also nice. Performance evals were 360 peer reviews, and compensation was determined mostly by HR based on what it was costing to bring in new hires, and then bumping everyone up to that level.
So at least at Netflix 10 years ago, performance wasn't really distributed at all. Everyone was top 10% industrywide.
Re: Hey, wait – is employee performance Gaussian distributed?
#66One of the things I loved about working at Netflix was that the base assumption was that everyone was a top performer. If you weren't a top performer, you were given a severance check. The analogy we used was a sports team. Pro sports teams have really good players and great players. Some people are superstars, but unless you're at least really really good you're not on the team. Performance and compensation were com…
It's really difficult for me to believe that they really got 10% top performers. For one, knowing the cut-throat nature of employment there, I would expect only a minority of developers would be willing to try working there, despite the awesome rewards.
Another reason I really don't trust that to be true is that I've never seen a good way to measure who is a top performer and who is not. I don't think there's one, people are good in different things, even within the same job... for one assignment, Joe may be the best, but for another, Mary is the winner (but again, to measure this reliably and objectively is nearly impossible IMHO for anything related to knowledge work - and I've read lots of research in this area!).
Finally, just as a cheap shot at Netflix, sorry I can't resist as a customer: they absolutely suck at the most basic stuff in their business, which is to produce good content in the first place, and very importantly, NOT FREAKING CANCEL the best content! I won't even mention how horrible their latest big live stream was... oh well, I just did :D.
Re: Hey, wait – is employee performance Gaussian distributed?
#67"IQ is Gaussian" – it was pointed out somewhere, and only then became obvious to me, that IQ is not Gaussian. The distribution is manufactured.
If you have 1000 possible IQ questions, you can ask a bunch of people those questions, and then pick out 100 questions that form a Gaussian distribution. This is how IQ tests are created.
This is not unreasonable... if you picked out 100 super easy questions you wouldn't get much information, everyone would be in the "knows quite a lot" category. But you could try to create a uniform distribution, for instance, and still have a test that is usefully sensitive. But if you worry about the accuracy of the test then a Gaussian distribution is kind of convenient... there's this expectation that 50th percentile is not that different than 55th percentile, and people mostly care about that 5% difference only with 90th vs 95th. (But I don't think people care much about the difference between 10th percentile and 5th... which might imply an actual Pareto distribution, though I think it probably reflects more on societal attention)
Anyway, kind of an aside, but also similar to what the article itself is talking about
Re: Hey, wait – is employee performance Gaussian distributed?
#68This is very unconvincing. The author already admits one reason why: > But there are low-performing employees at large corporations; we’ve all seen them. My perspective is that they’re hiring errors. Yes, hiring errors should be addressed, but it’s not clear that there’s an obvious specific percentage of the workforce that is the result of hiring errors. I think it is clear that we expect a certain percentage of hiri…
> So a Gaussian distribution is a far more reasonable assumption than a slice of the Pareto distribution
It's not an assumption. See the evidence referenced in the footnotes.
Re: Hey, wait – is employee performance Gaussian distributed?
#69Earlier quoted context omitted.
For analyses like this it just doesn't matter. Pick a metric and measure it over your workforce. Across the universe of salient metrics of interest you won't see a gaussian across your workforce. In a previous job I modelled this and concluded that due to measurement error and year-over-yead enrichment, Welchian rank-and-yank results in firing people at random.
All of Jack Welch’s management tactics should be considered suspect now. His performance at GE was 100% fueled by financial leveraging that blew up in 2009, basically killing the company. Nobody should be taking management lessons from this guy.
> Nobody should be taking management lessons from this guy.
Rank and yank is simply about lowering labor costs, once the business has achieved a significant moat and no longer needs to focus solely on growing revenues. A negotiating tool for the labor buyer, due to the continuous threat of termination.
Re: Hey, wait – is employee performance Gaussian distributed?
#70> Performance management, as practiced in many large corporations in 2024, is an outdated technology that is in need of an update
Author made a couple of fundamental mistakes: the first is they assume employees are (or should be) paid according to how much they "individually" earned the company. Employers strive to pay employees the minimum they can bear, on employer's terms. Those terms are information asymmetry and a Gaussian distribution. Fairness is the last thing one should expect from employers, but being honest about this is not good for morale, so instead, they rely on keeping employees uninformed, while the employers collude to gather everyone's remuneration history via the Work Number.
The second mistake they made is assume that companies would prioritize being lean and trimming the mediocre & bottom 5%. There are other considerations, combined productivity is more important than having individual superstars working on the shiniest features. How much revenue do you think a janitor or café staffer generates? Close to zero. The same goes for engineering. Someone has to do the unglamorous staff, or you end up with a dysfunctional company, with amazing talent (on paper).
Edit: there's an infamous graph that shows when aggregate worker productivity and average income. The two tracked closely, rising in tandem until the 1970s, where they got decoupled. With income becoming much flatter, and productivity continuing to rise. That's how the world has been for the past 50 years on the macro and the micro