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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?

#81

Post by EnergyAmy »

KK7NIL wrote: post #46
bhouston wrote: post #30

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…

The problem is that intellectual productivity is generally not possible to measure directly, so you instead end up with indirect measurements that assume a Gaussian distribution. IQ is famously Gaussian distributed... mainly because it's defined that way, not because human "intelligence" (good luck defining that) is Gaussian. If you look at board game Elo ratings (poor test for intelligence but we'll ignore that), th…

Do you have a reference for Elo ratings not being Gaussian? A casual search shows lots of graphs and discussions saying it is.

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

#82

Post by yreg »

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…

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)?

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

#83

Post by TrainedMonkey »

Employee performance MEASUREMENT appears to be Gaussian distributed. To my first simple, and let's be real probably somewhat wrong, approximation there are roughly 3 things that go into it.

1. There is a certain skill in communicating all the important things you've done, we shall lump likability + politicking into this one for convenience.

2. There is a premium that is placed on shiny new features and saving the day heroics. A lot less priority is placed on refactoring and solving the problems before they require heroics.

3. Finally there are individual's technical and self-management skills. I.E. it's important to work on important things and be good at it.

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

#84

Post by alphazard »

dataflow wrote: post #55
alphazard wrote: post #28

Earlier quoted context omitted.

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…

> The amount of money the manager is willing to match is the perceived value to the company. This assumes the manager is irrelevant here. But we all know that different managers (or non-managers) can communicate value differently for the same employee. So this metric can't be solely measuring the value of the employee.

You are talking about value as some intrinsic quality. I'm talking about value as a belief that is subjectively assigned, and that we can infer from actions. We can all agree on the actions, and we can agree on the possible beliefs that an action can imply.

The action to not match an offer implies that the company believes the employee adds less value than their new offer. If the company believed the employee was adding more value than their new offer, they would match the offer to keep the employee.

A company isn't a single rational agent. It's made up of people performing different functions. But behaving irrationally is a categorically bad thing for the company to do, and the leadership has a fiduciary duty to prevent the company from acting irrationally or otherwise not in its own self interest.

The manager may matter here, but the leadership is supposed to be creating a management structure such that the company acts rationally to make progress towards set goals.

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

#85

Post by exe34 »

brabel wrote: post #66
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…

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.

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

#86

Post by philipov »

> 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).

If the company would be dysfunctional without that janitor or software engineer, and not bring in as much revenue as a result, it sounds like the model that attributes close to zero revenue to them is already dysfunctional. If the company can't function without the janitor, then a significant portion of the revenue of the company should be attributed to them.

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

#87

Post by dingnuts »

diggan wrote: post #76
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 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 ar…

Did you even finish reading the comment you're replying to? It explicitly explains why employees who do not generate revenue are still valuable.

What you're describing, that money would go to whoever brings in revenue directly, is the myopic viewpoint of Sales with an emphasis on closing deals with nothing else. If it wasn't for the rest of the work, there'd be nothing to sell!

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

#88

Post by dangus »

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…

In summary, Netflix told all their employees that they are so amazing at their job, they are the top 10% of the whole world, they are like NFL athletes. If they don't perform to top tier levels, they'll be shown the door.

Here's a thought experiment: pretend that Netflix is lying and that their employees are not actually made up of the top 10% of talent industrywide. Let's for this thought experiment assume the realit is that they have slightly above average talent because Netflix pays slightly above industry average.

But now they've convinced those employees that they're not just slightly above average, they are like elite NFL players. And that means they have to work like elite NFL players. Netflix convinces their employees to work XX% harder with longer hours than the rest of the industry because they think they are elite.

"Only amazing pro athlete geniuses can work here" is way more motivating than "You have to work yourself to death with extra hours to make quota or you're fired!" because it's a manipulation of the ego.

I think this thought experiment is closer to reality than Netflix or their kool-aid-drunk employees will admit, and that Netflix's "pro athlete" culture is worker-harming psychological manipulation.

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

#89

Post by JackFr »

KK7NIL wrote: post #51
bhouston wrote: post #49

Earlier quoted context omitted.

> so you instead end up with indirect measurements that assume a Gaussian distribution. 100%. I was going to write something similar. > If you look at board game Elo ratings (poor test for intelligence but we'll ignore that), they do not follow a Gaussian distribution, even though Elo assumes a Gaussian distribution for game outcomes (but not the population). So that's good evidence that aptitude/skill in intellectua…

Lichess has public population data (they use a modified version of Glicko-2 which is basically an updated version of Elo's system): https://lichess.org/stat/rating/distribution/blitz It's basically a Gaussian with a very long right tail. Big caveat here is that these are the ratings of weekly active players. If we instead include casual players, I suspect we'd have something resembling a pareto distribution.

Good question - do the bad players play less because they are bad, or are they bad because they play less?
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