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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?

#251

Post by directevolve »

I had assumed stack ranking was specifically designed to force managers to fire low performers, without relying on their individual judgment. Since nobody likes to fire, this overcomes the inertia, and since relying on personal judgment exposed you to legal risk and principle agent problems, a simple rule was substituted. The author’s proposal to go back to managerial discretion would of course be incompatible with that intention.

I do wonder whether those implementing stack ranking are really that committed to a particular statistical model of employee productivity, or if they’re trying to solve a human and legal problem with an algorithm.

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

#252

Post by KK7NIL »

Bootvis wrote: post #100
KK7NIL wrote: post #60

Earlier quoted context omitted.

Very interested point, this is a close corollary to the central limit theorem, no? Doesn't this assume a linear relationship between relevant alleles and the given trait though?

It does. A lognormal distribution would model that better which gives a nice right tail so maybe it is a useful toy model.

A long right tail Gaussian fits the Elo ratings of active chess players very well, as I discussed in adjacent comments here.

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

#253

Post by crazygringo »

wavemode wrote: post #68
crazygringo wrote: post #62

This is very unconvincing. The author already admits one reason why: > But there are low-performing employees at large corporations; we’ve all seen them. My perspective is that they’re hiring errors. Yes, hiring errors should be addressed, but it’s not clear that there’s an obvious specific percentage of the workforce that is the result of hiring errors. I think it is clear that we expect a certain percentage of hiri…

> So a Gaussian distribution is a far more reasonable assumption than a slice of the Pareto distribution It's not an assumption. See the evidence referenced in the footnotes.

Incorrect.

It is absolutely an assumption. The "evidence" in the footnotes is about national salary data. Not the distribution for any individual position at a company.

And it is entirely possible (and probable) that performance at each position is distributed as a Gaussian, and all those Gaussians add up to a Pareto at a population level.

But you simply cannot take national-level data and assume it applies at the micro level. That's not how statistics works.

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

#254

Post by vineyardlabs »

dangus wrote: post #138
vineyardlabs wrote: post #111

Earlier quoted context omitted.

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…

Yeah perhaps times have changed. When I was an intern at JPL 10 years ago they brought some senior Netflix folks in to talk about their CDN reliability efforts and it was really impressive. I believe it was called Chaos Monkey and it effectively would take down data centers in production at random, forcing their network to be extremely reliable. Pretty wild idea.

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

#255

Post by kergonath »

jahewson wrote: post #189
nilkn wrote: post #159

Earlier quoted context omitted.

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…

I don’t think it’s helpful to use inflammatory labels like “toxic”. There’s no such thing. It’s an unfalsifiable claim.

> It’s an unfalsifiable claim.

It is very falsifiable. Take that employee out of the team and look at the outcome.

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

#256

Post by HDThoreaun »

ec109685 wrote: post #114
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…

Two problems with this are 1. It is very difficult for outside employers to tell is someone is a high performer, and 2. Economists also teach to always think on the margins. A employees value isnt the amount you bring in more than if they didnt exist, it's the amount they bring in over a replacement. If people are willing to replace you for $5/hr even if you make the company $100/hr you wont get anywhere near that amount.

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

#257

Post by johnnyanmac »

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…

>. How much revenue do you think a janitor or café staffer generates? Close to zero. The same goes for engineering. Someone has to do the unglamorous staff, or you end up with a dysfunctional company, with amazing talent (on paper).

There's two ways to make a profit. Gain more revenue, and not lose more revenue. Those kinds of staff are the latter, in addition to other aspects like HR (preventing lawsuits/settlements which are expensive).

But yes, there's so many hidden factors on measuring "productivity". That's why stack ranking is a bit stupid in the long run. Some people aren't just producing value but bringing out productivity in others. But that's an opportunity cost for a stacked system. Such individuals should be considered for management, not kicked out.

>The two tracked closely, rising in tandem until the 1970s, where they got decoupled. With income becoming much flatter, and productivity continuing to rise. That's how the world has been for the past 50 years on the macro and the micro

Yup, very well known that we really should be close to that ideal John Maynard Keynes predicted all the way in 1930 of 15 hour workweeks by 2030. Instead, I believe the average work week in the US is 50 hours and it's still a very controversial battle to get to a 4 day work week.

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

#258

Post by liontwist »

mjburgess wrote: post #242
liontwist wrote: post #234

Earlier quoted context omitted.

If it was really “pseudoscience” you would present the experiment that demonstrates it’s obviously false rather than name calling (asserting a label with a negative connotation). The reality is not so clear and you have to contest with decade long studies in support. Maybe those studies have flaws, but it’s not a vacuum. I have already stated I don’t believe IQ is intelligence.

There is no experiment which proves its false. This is the problem with pseudoscience, it's "not even wrong". Psychometrics presents summaries of data as if they are properties of reality. As-if taking a mean of survey data meant that this this mean was a property of the survey givers. This applies only in extremely controlled experiments in physics, and even then, somewhat rarely. All one has to do to show the entir…

You’re softening your position, you agree it exists and is testable, you just disagree with the interpretation of those results.

> is present a single more plausible theory

A minority support for a workable theory is quite a bit different state of affairs than “false science” which the word implies.

It’s a form of name calling.

> There is no experiment which proves it’s false. This is the problem with pseudoscience, it's "not even wrong".

In other words it’s lost popularity in certain academic circles, but not because of overwhelming new evidence.

> This applies only in extremely controlled experiments in physics,

I agree, which is why you can’t casually dismiss developed psychological theories as if they are from a crank, and you are enlightened.

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

#259

Post by nextn »

groby_b wrote: post #136
FredPret wrote: post #77

Earlier quoted context omitted.

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 ca…

What is a flaw of the IQ test?

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

#260

Post by johnnyanmac »

thrwaway1985882 wrote: post #142
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…

> 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…

Just as a curiosity, are those 2-3 people "underperformers" or simply "Not as high performers"? In an org that size I can imagine everyone pulls their weight, but there will simply be others who are inevitably more productive for a variety of reasons.

>hiring is a goddamn mess right now.

Any insight you can give on why? I know enough from the hirees end, but how's it on the other side?

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