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Hey, wait – is employee performance Gaussian distributed?

timdellinger.substack.com

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Re: Hey, wait – is employee performance Gaussian distributed?

#111

Post by vineyardlabs »

dangus wrote: post #88
jedberg wrote: post #65

One 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…

In summary, Netflix told all their employees that they are so amazing at their job, they are the top 10% of the whole world, they are like NFL athletes. If they don't perform to top tier levels, they'll be shown the door. Here's a thought experiment: pretend that Netflix is lying and that their employees are not actually made up of the top 10% of talent industrywide. Let's for this thought experiment assume the reali…

The interesting thing about this thought experiment is that you assume Netflix would have slightly above average employees if they have slightly above average compensation. Now what happens to the experiment if Netflix has ridiculously above average, end of the bell curve compensation (as they do)? Serious question, I do not and have not worked for Netflix.

Re: Hey, wait – is employee performance Gaussian distributed?

#112

Post by bornfreddy »

seiferteric wrote: post #57

A lot of focus on employee performance, but relatively little on management performance. I always wonder how a once great company can slowly decline into irrelevance. Take yahoo for example, it could only be due to management failure over several decades right? How can companies optimize for management performance?

Firing 10% each year would be a great start in many companies. ;)

Re: Hey, wait – is employee performance Gaussian distributed?

#114

Post by ec109685 »

sangnoir wrote: post #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 Performance management, as practiced in many large corporations in 2024, is an outdated technology that is in need of an update Author made a couple of fundamental mistakes: the first is they assume employees are (or should be) paid according to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…

Employers want to pay the minimum, clearly, but until a person’s salary exceeds the value they bring to a firm, there will be other firms willing to pay more and attract that talent. So provides some upward pressure on wages, which the author addresses:

> Economists will teach you something called the Marginal Productivity Theory of Wages, the idea being that the amount of money that a company is willing to spend on an employee is essentially the value that the company expects to get out of their work. This strikes me as mostly true, most of the time, and likely to be the case in the corporate world that we’re considering here.

Re: Hey, wait – is employee performance Gaussian distributed?

#115

Post by iambateman »

sokoloff wrote: post #31
iambateman wrote: post #21

As employees, our expectations for performance management come from the system of giving grades in school. What's interesting is that school grades often doesn't follow a normal distribution, especially for easier classes. I suspect that getting an "A" was possible for 95%+ of students in my gym class and only 5-10% of the students in my organic chemistry class. In the same way, some jobs are much easier to do well t…

Would “doing all of the tasks they were asked to do” really be “exceptional”? What could be exceptional about that? I would think it would be “meets expectations” at most.

I have an issue with this thinking, but I don't mean to pick on you...it's common within organizational politics.

Managers suggest that an employee must "go above and beyond" their ordinary duties to get an exceptional rating.

But that just means that "going above and beyond" is, in fact, a duty. The problem is it's an ill-defined duty which is even more susceptible to the whims of what the manager thinks counts as "above and beyond." Good managers give clear rubrics of performance.

To me, "meets expectations" says that the employee's error rate was at acceptable levels and "exceptional" means they had almost no errors whatsoever.

Re: Hey, wait – is employee performance Gaussian distributed?

#116

Post by silvestrov »

FredPret wrote: post #77
ianbicking wrote: post #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…

This is a subtle aspect of intelligence measurement that not many people think about. To go from an IQ of 100 to 130 might require an increase in brainpower of x, and from 130 to 170 might require 3x for example, and from 170-171 might be 9x compared to 100. We have to have a relative scale and contrive a Gaussian from the scores because we don’t have an absolute measure of intelligence. It would be a monumental achi…

I wonder how a graph looks for "how many seconds does it take people to run 100 meters".

Might be a mix because quite a number of older or overweight people runs very slowly and some can't at all.

Re: Hey, wait – is employee performance Gaussian distributed?

#117

Post by kozikow »

deepnet wrote: post #108
sangnoir wrote: post #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…

My takeaway ( and an indication of who actually needs a performance review [ e.g. the manager ]) “ It’s my opinion that the biggest factor in an employee's performance – perhaps bigger than the employee’s abilities and level of effort – is whether their manager set them up for success “

Or other way around - in bigcorp (or in startup) choosing what to work on have much bigger impact than the work you do.

On very low level it's up to your manager. As time goes, even as IC you have a lot of agency. It's not just company selection, team selection, but also which part of the project you are working on and how you are approaching solving it.

Of course "if everyone does this, who will fix the bugs". However, the quickest promoted people I've seen are the people who were excellent at politics-izing (and sometimes foresight) the best work assigned to them.

Re: Hey, wait – is employee performance Gaussian distributed?

#118

Post by wavemode »

This concept is not new - see [0].

There's ample research that Welchian stack ranking, and assuming a Gaussian distribution of employee performance, is not well-founded. Even its original pioneers (General Electric) have abandoned the practice (see [1]).

Not sure why there are so many commenters here defending the Gaussian model. Most researchers at this point agree that a pareto distribution is more realistic.

[0]: https://hbr.org/2022/01/we-need-to-let-go-of-the-bell-curve

[1]: https://qz.com/428813/ge-performance-review-strategy-shift

Re: Hey, wait – is employee performance Gaussian distributed?

#119

Post by iambateman »

atoav wrote: post #39
iambateman wrote: post #21

As employees, our expectations for performance management come from the system of giving grades in school. What's interesting is that school grades often doesn't follow a normal distribution, especially for easier classes. I suspect that getting an "A" was possible for 95%+ of students in my gym class and only 5-10% of the students in my organic chemistry class. In the same way, some jobs are much easier to do well t…

One thing where this analogy stops to work, is that more so than in school your performance in a company can be highly dependent on how well and/or timely others do their job. Your managers performance metric may or may not catch that. E.g. imagine you are assigned a project where you have to interact a lot with department X and now department X is running at/over capacity, so you are performing worse, because their…

Great perspective and I agree. This is the basic reason that performance management in an organization is so difficult and fraught.

A significant percentage of people in an organization create the problems they solve.

Re: Hey, wait – is employee performance Gaussian distributed?

#120

Post by jajko »

exe34 wrote: post #85
brabel wrote: post #66

Earlier quoted context omitted.

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, pe…

I think it's safe to assume gp has drunk the koolaid. I spoke to somebody from the army once, and they too had the top 10% and it's difficult to imagine that every employer employs the top 10%. it's a cultural meme really, like everybody tells themselves they are good people really.

At some point, people invest into their work/employment so heavily and tie it to their identity tad too much, they internally need to feel this is the right and best choice, which for many top talents may mean working with "top 10%", whatever that means. So otherwise smart folks will start parroting official company policies and become a 'good boy'. Suffice to say I don't look kindly on this, but it highly depends on the business.

I've heard similar claims many times before, albeit mostly not from places paying so much. Ie at university, there was promotion seminar from Accenture branch in our country, the guy was some higher manager and stated the same, how they want only the best of the best and work hard getting and maintaining this. Then maybe 10 years later I had 20 of them as contractors and reality was not that rosy, huge variation from good to terrible.

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