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Hey, wait – is employee performance Gaussian distributed?

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

#131
post #66
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…

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…

Netflix has a reputation for the highest salaries in tech. That tends to attract top talent.

https://medium.com/dice-insights/netflix-ceo-explains-why-he...

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

#132
post #66
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…

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 would expect only a minority of developers would be willing to try working there, despite the awesome rewards.

So much this. OP's description of the work environment is stressing me out and I don't even work there.

At best a strategy like the one described above will get you the top 10% of people who are willing to put up with that kind of work environment, which means you might get the top 10% of single, childless 20–35-year-olds—people who are motivated first and foremost by ego and pay and don't value stability and work-life balance. But in the process you're more or less explicitly saying that you're not interested in people who are further along in their lives and value stability and reliability more than ego and raw paycheck size.

This means that you're missing out on the top 10% of 35–65-year-old engineers who are now parents with responsibilities outside of their career, even though the top 10% of that bracket would typically be "better" by most metrics than the top 10% of the younger bracket you're pre-filtering down to.

In a startup environment this might be a perfectly rational tradeoff—you want to filter for people who don't have much else to do and can give you a huge amount of unpaid overtime in exchange for you stroking their ego—but past a certain size and market share you need the stability offered by mature, experienced professionals.

If Netflix failed to get over that hump, it's not so surprising after all that they fell so hard in the last 10 years.

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

#133

"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…

Sum of N independent similarly distributed variables (questions), will tend to be normally distributed, that the central limit theorem, no need to manufacture anything.

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

#134

> 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 “

It's not so much that managers need a performance review per se, but they need training and useful feedback.

If you've ever worked in tech management, your experience likely was "IDK, you're senior, you vaguely have an idea what we should do, here, go manage a few folks".

No training, or minimal training. Often with an expectation that of course you can still be a strong technical contributor, because how much time could managing folks possibly take. And then mostly being evaluated based on how your reports delivered.

As long as we follow that approach, we'll struggle with managers doing the right thing, because they neither have learned it, nor have they seen it modelled.

Sure, that expresses in bad manager performance, but often nobody can really see it or tell people what they should do better. Performance review is too late to fix that. (This is, btw, mostly true for employees as well - if you only talk about performance 1-4 times a year, people are being set up to fail)

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

#135

> 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…

> 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

This is false. Supply and demand is a factor. I could clean the toilets at the office, if janitors were in short supply my boss might setup a rotation schedule - nobody wants to but it must be done and so he would pay me. However because janitors are cheaper than me he doesn't. This isn't just theoretical - McDonald's mostly has the crew clean the floors - janitors make more money than McDonalds crew.

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

#136

"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…

> It would be a monumental achievement if computer science ever advances to the point where we have a mathematical way of determining the minimum absolute intelligence required to solve a given problem.

While that would be nice, it's likely a pipe dream :( There's a good chance "intelligence" is really a multi-dimensional thing influenced by a lot of different factors. We like pretending it's one-dimensional so we can sort folks (and money reinforces that one-dimensional thinking), but that means setting ourselves up for failure.

It doesn't help that the tests we currently have (e.g. IQ) are deeply flawed and taint any thinking about the space. (Not least because folks who took a test and scored well are deeply invested in that test being right ;)

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

#137

> 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…

"provides upward pressure on wages" is true, but you simply can't get from there to actually demonstrating the "marginal producivity theory of wages".

It is pretty clear that the employment market suffers from severe inefficiency and information asymmetry. It takes a pretty bad economist to look at a market like that and think that its pricing is accurate.

Employees often don't know how much value they bring and thus are severly limited as counter party and other companies have a hard time predicting how much value you'll be able to add for the. These (plus many other factors) mean that you should expect significant mismatches between pay and performance.

Edit: None of this is evidence against performance being a paretor distribution (which makes sense to me), but we're gonna need more than just pay data to determine that.

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

#138
post #88

Earlier quoted context omitted.

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.

I was really giving them the benefit of the doubt. I don’t think Netflix had anything special above and beyond any other Silicon Valley software company. They just pushed this narrative and nobody questioned them.

Netflix as a business isn’t even way ahead of competition anymore. It’s not better than Hulu or Max or anything else.

Netflix’s platform crumbled handling live streaming a boxing match, while Amazon and the rest of the legacy media companies have no issues streaming NFL games every weekend, and I’m supposed to believe that Netflix engineers are better than the ones at Paramount+ who never made me wait for a buffer to watch Premier League or NFL on CBS.

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

#139

This is a well constructed empty argument because it glosses over the central concern, ‘employee performance’. Without defining that we have no idea what the graph represents.

On a meta note, you're right to note that unclear terms undermine our collective reasoning, despite a proper chain of propositions.

I've found Term Logic[1] to be useful for figuring out why certain discussions confuse me. I've also used to avoid unnecessary arguments by seeing if the participants are starting with clear concepts (signaled by terms).

[1] https://en.wikipedia.org/wiki/Term_logic#Basics also this explainer https://adoroergosum.blogspot.com/2015/05/the-three-acts-of-...

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

#140
The author looks at "observables" of performance without considering whether there might be confounders such as those discussed in great nuance here https://onlinelibrary.wiley.com/doi/full/10.1111/joes.12328 .

He cites similar work by William Shockley who taught both electrical engineering and scientific racism at Stanford https://en.wikipedia.org/wiki/William_Shockley (no swipe at the author, just pointing at the biased motiviations of some of the researchers foundational to the idea of "high performers").

In general, when you see pareto structures or power laws, you should think of compound or cascade effects, which in human structures generally means some form of social mediation. Affinity for a desireable skill might be gaussian, but the selection process means that the people who _get_ to do that skill might become pareto shaped because if you aren't much better than the next guy, you wouldn't stably stay at the top. Similar logic can hold for other expressions.

In general, I wish more people would read https://blackwells.co.uk/bookshop/product/Causality-by-Judea... or at least the more accessible https://mixtape.scunning.com/ before starting to conjecture from data about social systems - the math will tell you what you can and cannot speculate on.

(fun exercise: draw the causal models of IQ in https://dagitty.net/ and ponder the results)

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