It's the marginal dollar that contributes profit so the marginal employees are actually the most profitable.
Hey, wait – is employee performance Gaussian distributed?
221–230 of 341 posts
Re: Hey, wait – is employee performance Gaussian distributed?
#222> Performance management, as practiced in many large corporations in 2024, is an outdated technology that is in need of an update Author made a couple of fundamental mistakes: the first is they assume employees are (or should be) paid according to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…
> 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'll add a perverse incentive too that I've talked about elsewhere – hiring is a goddamn mess right now.
Not to take away from any of your points...
But this statement has been made every year for as long as I've been in the industry (about twenty years). I suspect it's been made much before that too.
Re: Hey, wait – is employee performance Gaussian distributed?
#223Earlier quoted context omitted.
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…
> 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.
The actual value is complex. The only reason an engineer’s presence at the company generates $X in revenue is because the company already has sales, marketing, finance, legal, and all the other necessary functions covered. On their own, that engineer’s output is worth less. So a light switch test does not tell the whole story. The surplus from the combined output is deserved by everyone whose input is required for those $X, not just the engineer.
In different terms, maybe you leaving costs the company $X. But if product engineer Joe Bob left first, maybe you leaving suddenly only costs the company $Y, where $X > $Y. Are you really worth $X?
Re: Hey, wait – is employee performance Gaussian distributed?
#224Earlier quoted context omitted.
> 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, childle…
Most of the people I worked with were 30-50 years old with families and kids. The work life balance was great. I was the rare outlier who was married without kids. We had senior engineers who would work hard and get things done and then go and be parents and partners.
We’re going to need a rigorous, data-driven assessment of their effectiveness in parenting and partnering to back up this claim.
Re: Hey, wait – is employee performance Gaussian distributed?
#225Earlier quoted context omitted.
A bit offtopic, but I've been curious about this. Could you please describe how the unlimited vacation policy worked? How did people feel about it and whether they were anxious regarding using it (afraid that it will reflect on them badly when they take "too much" time off)?
I loved the unlimited vacation policy. I took more vacation at Netflix than anywhere else. No one was anxious about using it. It helped that senior leadership set a good example. The CEO took a few weeks off every year and made sure everyone knew that it was ok to do that. He also made sure all his directs took a few weeks every year at a minimum. There was a culture of management encouraging you to take advantage of…
Ok, but how about few months? Did anyone do that?
Re: Hey, wait – is employee performance Gaussian distributed?
#226Earlier 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 least good behavior isn’t a zero-sum game.
Re: Hey, wait – is employee performance Gaussian distributed?
#227> 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…
There’s a “marriage problem” element not covered here. The marginal value of an employee is higher if the team they join is small. Eventually, the team reaches a size where more employees add little value. Most people understand this. However, it follows that the marginal productivity theory of wages gets more complicated. They might not be willing to pay you the full value they get from your work, for example, because they might suspect a replacement (e.g., keeping team size constant) would likely produce higher value. Or, they might pay you much closer to the full value of your work than others because they fear a replacement would likely bring lower value.
Re: Hey, wait – is employee performance Gaussian distributed?
#228> 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 believe the graph you're referring to is here: https://wtfhappenedin1971.com/
Re: Hey, wait – is employee performance Gaussian distributed?
#229Earlier quoted context omitted.
I loved the unlimited vacation policy. I took more vacation at Netflix than anywhere else. No one was anxious about using it. It helped that senior leadership set a good example. The CEO took a few weeks off every year and made sure everyone knew that it was ok to do that. He also made sure all his directs took a few weeks every year at a minimum. There was a culture of management encouraging you to take advantage of…
Ok, but how about few months? Did anyone do that?
Not even workers in France get a few months vacation. What are you after here?
Re: Hey, wait – is employee performance Gaussian distributed?
#230Earlier quoted context omitted.
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…
In France, if you lay off people collectively for economical reasons, those people have the right to be re-hired first should the company open jobs that are compatible with their qualifications within 1 year after the layoff (it's called "re-hire priority").
Interesting. Is that a law or a typical contract term?