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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?

#171

Post by thrwaway1985882 »

nilkn wrote: post #159
thrwaway1985882 wrote: post #142

Earlier quoted context omitted.

> 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. I'll add a perverse incentive too that I've talked about elsewhere – hiring is a goddamn mess right now. If I trim the bottom 5% of my org (in my case, 2-3 e…

I think the value of low performers becomes much more obvious when you separate out the concept of a toxic employee. Toxic employees hurt the team or organization whether low performing or high performing, and with rare exceptions it’s almost always worth getting rid of them. Toxic employees are the people getting into arguments and conflicts all the time, dragging others down constantly. Or they’re the managers who…

This is a great point. Toxicity is entirely orthogonal to performance. And you rarely have to worry about toxic low performers: if you're unlucky enough to hire them, they don't stay around for long.

But toxic top performers are IME one of the biggest challenges a manager will have to deal with. You have to root them out the moment they land in an organization because given enough they'll push out the non-toxic top performers, leaving you with a toxic asshole and a bunch of flunkies. And you have to convince everyone outside the team that yes, they get things done, but they're enough of an asshole that you'd rather risk hiring someone to deliver less but also destroy less.

All this reminds me of the quote attributed to everyone under the sun (Clausewitz, various US civil war generals, Omar Bradley, you name 'em) but apparently was said by Kurt von Hammerstein-Equord[0]

> There are clever, hardworking, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and hardworking; their place is the General Staff. The next ones are stupid and lazy; they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the mental clarity and strength of nerve necessary for difficult decisions. One must beware of anyone who is both stupid and hardworking; he must not be entrusted with any responsibility because he will always only cause damage.

Turns out this problem is quite old, indeed.

[0] https://en.wikipedia.org/wiki/Kurt_von_Hammerstein-Equord#Cl...

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

#172

Post by crystal_revenge »

FuriouslyAdrift wrote: post #131
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…

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...

My career experience has been that there's low correlation between TC and talent, especially at the high end of the talent spectrum.

While I know some really smart people working at various FAANGS making great TC, nearly all of the people that are truly something special are grinding away on hard problems, relatively unknown, getting paid "fine" because they'd rather work on truly hard problems than make optimal amounts of money.

My experience has been that the high TC crowd is above average skillwise, but attracts far more people whose number one concern career-wise is maximizing TC. These are often people that chose technical work because they did the math and felt it was the highest paying per effort required but aren't really passionate about the areas they get paid in.

Truly brilliant people, especially ones from less traditional backgrounds, tend to have a hard time surviving in high TC orgs because they aren't aligned with the culture. Likewise whenever I interact with someone in a high TC role, I'm undoubtedly disappointed by how little they care about their area of work. For them the point of the job is to make money, and they make a lot of money, so there's nothing to talk about.

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

#173

Post by wcfrobert »

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…

Completely agree. Yes, great engineers tend to be compensated well, but only slightly more than the median performer. In other words, a 10x engineer isn't getting paid 10x more. It's probably more like 1.5x to 2x. If we somehow invent a magical way to track productivity numbers exactly, I suspect we'd see something closer to Price's Law [1] (Pareto distribution) which is essentially what this post is about, where something like 20% of workers contribute to 80% of the results. However, that doesn't means the other 80% is expendable which relates to your second point.

Paying what employees "earn" for the company is incompatible with our economic system where companies want to be profitable. Paying employees what they "deserve" based on contribution is probably also undesirable. I think you'd get the same income inequality dynamics but within companies. There is an averaging effect when you work at large corporations. That's either a good thing or a bad thing depending on the person. Individual contributions are averaged out, but so are responsibilities. I think Paul Graham articulated this wonderfully in his essay on what a job is and why some prefer to work for startups [2].

[1] https://www.kienbaum.com/blog/prices-law-and-the-trouble-of-...

[2] https://paulgraham.com/wealth.html.

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

#174

Post by PittleyDunkin »

nox101 wrote: post #167
PittleyDunkin wrote: post #147

Earlier quoted context omitted.

> there will be other firms willing to pay more and attract that talent. ...marginally more. Still nowhere near the actual value their labor brings in. We simply don't have a competitive enough employer market to provide the upward wage pressure that would be sufficient to pay people fairly.

If you think you're not getting paid enough you should quit and start your own company. The fact that google/apple/amazon make 5-10x per employee is not proof that you're underpaid. The chef at French Laundry makes $$$$$$$, does that mean the apple farmer who supplied the apples for $ is underpaid?

> If you think you're not getting paid enough you should quit and start your own company.

I'd rather eat a bullet, thanks. I have dignity and I'd like to keep it.

> The fact that google/apple/amazon make 5-10x per employee is not proof that you're underpaid.

That's exactly what it means.

> The chef at French Laundry makes $$$$$$$, does that mean the apple farmer who supplied the apples for $ is underpaid?

The chef is paid for their labor. Shareholders contribute nothing to society.

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

#175

Post by wombatpm »

abeppu wrote: post #150
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…

It's also just embarrassing that this is supposed to be a data science blog about employee performance and the only non-simulated data directly presented or discussed is the US wage distribution, where the author has just cavalierly marked the x-axis as "Performance". There's all this spew, and the author makes claims about what good data scientists do ... and there's no data in this discussion that's directly releva…

That’s on par with most data science projects I’ve seen in my corporate job.

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

#176

Post by HWR_14 »

thifhi wrote: post #73
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…

> Performance and compensation were completely separate, which was also nice. Huh? How is that nice? Does performance and compensation not correlate in your ideal world, or am I misunderstanding it?

I read that as compensation wasn't correlated to your performance relative to peers. Which is I think what most people would appreciate in an ideal world. I don't think they meant absolute performance and compensation weren't linked.

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

#177

Post by HeyLaughingBoy »

efitz wrote: post #157
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…

I have a crazy idea. If a corporation lays off any people in a particular job category/title, that corporation should not be allocated ANY H1B visas for that job category/title for the next year. If a corporation institutes any policy that requires decimation (or any other statistic-based termination program) of employees with a particular job category or title, or if IN EFFECT they perform this (because they will ju…

It's entirely possible to need to lay off people for one type of work while being unable to staff up for a different skillset. I would expect software developers, of all people, to understand that we're not commodities.

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

#178

Post by robertlagrant »

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 strive to pay employees the minimum they can bear, on employer's terms

I don't think it's worth thinking like this. An employee's salary is floored by their value to any company, and ceilinged by their value to the company currently employing them.

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

#179

Post by Retric »

nilkn wrote: post #159
thrwaway1985882 wrote: post #142

Earlier quoted context omitted.

> 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. I'll add a perverse incentive too that I've talked about elsewhere – hiring is a goddamn mess right now. If I trim the bottom 5% of my org (in my case, 2-3 e…

I think the value of low performers becomes much more obvious when you separate out the concept of a toxic employee. Toxic employees hurt the team or organization whether low performing or high performing, and with rare exceptions it’s almost always worth getting rid of them. Toxic employees are the people getting into arguments and conflicts all the time, dragging others down constantly. Or they’re the managers who…

> What might look like low performance in a corporate environment can just be someone setting boundaries and refusing to let work infringe too much on their personal life.

Another is poor fit between the employee and the job. One the lowest performers in a role can sometime be a great in another because they do/don’t care about clean code, long hours, spelling / grammar issues, minor aesthetic issues, minor bugs, speed, etc etc.

The universally perfect employee basically doesn’t exist as much as organizations want everybody to be interchangeable cogs.

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

#180

Post by torginus »

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…

Yes, this has always bothered me. IQ doesn't easily correspond to any measurable real-world quality.

For example, if we would postulate that height is gaussian, we could measure people's heights and just ordering them we could create a gaussian distribution. Then we could verify the hypothesis of height being gaussian by mapping the probability distribution function's parameter to a linear value (cm) and find that these approaches line up experimentally.

We could do the same thing with any comparable quantity and make an order of them and try to map them to a gaussian distribution, but we would have no knowledge if what we were making actually corresponded to a linear quantity.

This is a serious issue, as basically making any claim like 'group A scores 5 points higher than group B' is automatically, mathematically invalid.

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