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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?

#21

Post by iambateman »

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 than others.

So we should expect that virtually all administrative positions will have "exceptional" performance, which is to say that they were successful at doing all of the tasks they were asked to do. But for people who's responsibility-set is more consequential, even slightly-above average performance could be 10x more meaningful to the company.

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

#22

Post by mitthrowaway2 »

riazrizvi wrote: post #4

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.

The article does briefly caution about measuring difficulties. But given that the main conclusion is an argument against stack-ranking-and-firing, the question of "what is performance" passes forward to whatever metric the stack-ranking manager was going to use when they were planning to fire the "bottom" 10% of their payroll.

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

#23

Post by nightski »

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…

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.

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

#24

Post by timdellinger »

nonameiguess wrote: post #5

It's worth hammering on this point as much as possible hoping a few people listen, but there is at least one other important point about employee performance. If you're allocating bonuses, a single year's performance is probably a good way to do that, assuming you can accurately measure it. When you're talking retention and promotion, though, you're making a prediction of future performance, possibly at a variety of…

Interestingly enough, sports salaries are Pareto-distributed, which says something about how valuable (as assessed by the marketplace) each player is

https://marginalrevolution.com/marginalrevolution/2024/08/go...

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

#25

Post by thrance »

xphilter wrote: post #2

Yeah good luck. I don’t think any hr decisions have ever been about data; it’s about following norms. If you can get the rand corp or heritage foundation to adopt this policy then maybe corporations would look into it.

The Heritage Foundation would probably fire every competent employees and replace them with partisan sycophants, like they plan to do with America in Project 2025.

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

#26

Post by pembrook »

bhickey wrote: post #12
riazrizvi wrote: post #4

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.

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.

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

#27

Post by Cheer2171 »

bhickey wrote: post #12
riazrizvi wrote: post #4

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.

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.

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.

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

#28

Post by alphazard »

riazrizvi wrote: post #4

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.

You could replace "employee performance" with "value to the company" and the same argument would hold. Performance is difficult to measure, but we get a good estimate of value to the company any time someone receives a competing offer and drags their manager to the negotiating table.

The amount of money the manager is willing to match is the perceived value to the company. This is how the company actually behaves (we know for sure whether they match the offer or not) and that behavior implies a value to the company, regardless of what anyone says in performance review season.

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

#29

Post by jampa »

Going through some performance reviews as a manager, I always try to push back a bit against the bell curve. It kinda reminds me of the "stack ranking.". There are also some factors to be considered:

If you are in a hiring freeze or not promoting, most of the curve should shift right, assuming you are hiring great people. They will probably perform better quarter after quarter. Some might counter-argue that if everyone performs better, this should be the "new expectation," but I disagree: the market sets expectations.

If you have someone at a senior level with expectations of staff, for example, they won't be in the company for long. I hired many great engineers who later said they only looked for a new job because they were never promoted despite being overperformers.

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

#30

Post by bhouston »

I would feel better if this was derived from empirical data rather than just rhetoric. This seems super testable, no? There is probably a ton of data already in different industries with regards to productivity.

Even if human talent have a Pareto distribution (which is not clear), the people employed by a company are a selected sub-set of that population, which would likely have a different distribution depending on how they are selected and the task at hand.

I think that any of these simplified distributions are likely not generalizable across companies and industries (e.g. productivity of AWS or Google employees are likely not distributed like employees of MacDonalds or Wal*Mart because of the difference in hiring procedures and the nature of the tasks.)

Get hard data within the companies and industry you are in and then you can make some arguments. Otherwise, I feel it is too easy to just be talking up a sand castle that has no solid footing.

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