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Hey, wait – is employee performance Gaussian distributed?

timdellinger.substack.com

71–80 of 341 posts

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

#71
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…

How are 'top performers' and 'low performers' being defined in this context?

In my experience, these labels in corporate environments often correlate more with social dynamics and political acumen than actual work output. People who are less socially connected or don't engage in office politics may find themselves labeled as 'low performers' regardless of their actual contributions, while those who excel at workplace networking might be deemed 'top performers'.

The interview process of these kind of companies also often falls into a problematic pattern where interviewers pose esoteric questions they've recently researched or that happen to align with their narrow specialization from years in the same role. This turns technical interviews into more of a game of matching specific knowledge rather than evaluating problem-solving abilities, broader engineering competence or any notion of 'performance'.

Let's be honest: how many people can truly separate personal feelings from performance evaluation? Even with structured review processes in place, would most evaluators give high marks to someone they personally dislike, even if that person consistently delivers excellent work?

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

#72

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…

> I would feel better if this was derived from empirical data rather than just rhetoric.

This exact statement applies to the practice of Gaussian performance ranking. It is pure corporate politics, it isn't founded in sound statistics.

The present author at least provides multiple sources of statistical evidence for their beliefs, if you read the footnotes.

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

#73
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?

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

#74
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…

> the most basic stuff in their business, which is to produce good content in the first place, and very importantly, NOT FREAKING CANCEL the best content!

It isn't that simple. Making money from content is not 1-to-1 related with the quality of the content. There are many examples of great content that doesn't make money, and many examples of content that makes a lot of money that isn't great. Also there are many differing opinions on what 'great content' even is.

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

#75
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…

How can 360 peer performance reviews ever work? The incentives are against a fair evaluation: the reviewers have the incentive to overly criticize others so that they can stand out more.

I'm not saying that everyone on a 360 review process does that. But the incentive is there and it's working against fair reviews.

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

#76

> 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 first is they assume employees are (or should be) paid according to how much they earned the company

From the perspective of a employee and/or human, that does seem like the most fair way of distributing what the company earns, sans the money that gets reinvested straight back into the business itself. But I'd guess that'd be more of a co-operative, and less like the typical for-profit company most companies are today.

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

#77

"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 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.

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

#78

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…

Personally I think manager/report mismatches are far greater than hiring errors.

When A doesn't like B it doesn't mean A or B are necessarily unfit to work at the company, but it generally results in the subordinate being framed as underperforming or not being given the resources to perform.

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

#79
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…

> the most basic stuff in their business, which is to produce good content in the first place, and very importantly, NOT FREAKING CANCEL the best content! It isn't that simple. Making money from content is not 1-to-1 related with the quality of the content. There are many examples of great content that doesn't make money, and many examples of content that makes a lot of money that isn't great. Also there are many dif…

It's an increasingly bad business to be in.

Netflix burns customers when they cancel beloved shows, and they constantly have to experiment.

They now have a bazillion competitors who are ramping up comparable businesses. There's no moat or secret sauce competitive advantage. Customers are free to switch at no cost.

Bigger tech companies are using media content as simply a fringe benefit or commodity to enhance their platform offerings.

YouTube, on the other hand, is already starting to eclipse the entire Netflix business model. YouTube is a monster with a huge and enviable moat, and it's only going to continue growing. It's a much stronger business model and they have a sticky and growing user base.

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

#80

"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…

I didn't know that about how IQ tests are formed. Would that mean that there could be some sliver of the population that could score in the top %'s on the 1000 question test but due to the selection of questions, scored average on the final IQ exam? If so, that'll be my excuse next time I have to take an IQ exam. I just got the wrong distribution.
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