# A Convenient Organizational View of Performance By:: [[Brian Heath]] 2022-10-25 Many organizations believe that employee performance is normally distributed. That is to say that most people are centered around average performance with two small tails representing very poor or good performance. This is a convenient organizational construct concerning promotions, pay increases, and firing people. If nearly everyone exists in the middle due to a statistical phenomenon, the justification to only promote the very best seems reasonable. It also justifies the pyramid hierarchy observed in most organizations. There are fewer people at the top because there are fewer high performers. This extrapolates to pay increases. It is much more cost effective to pay a few people at the top significantly more than to give everyone in the middle a moderate pay increase. After all, the people in the middle are just average and easily replaced. On the other side of the normal distribution are the poor performers. Everyone within an organization knows that poor performers exist, but the normal distribution explanation makes the number of these poor performers small. Thus, there are no abnormally large fears of [[Layoffs]] as it is assumed that only a few will be fired. This also reduces the management burden when it comes to performance management. Unfortunately, human performance is not normally distributed. As mentioned earlier, it is a convenient organizational narrative. Human performance most often follows the power law distribution. Think of a ski slope on a mountain. On the left, there are many people who you might call poor performers. Most people are these poor performers. The curve quickly descends, then starts to level off and extends on forever. This means that there are significantly more high performers than seen from a normal distribution. You can assume that 50% of the work at any organization is done by just the square root of the number of people in that organization. That is to say that 10 employees complete 50% of the work in an organization of 100 employees. Human performance following the power law distribution blows up traditional organizational ideals. Most people are poor performers compared to superstars. Should you fire 50% of your workforce every year? That's likely a bad idea and misses the point of naturally observed distributions. The distribution of performance at your company will always follow the power law regardless of how many people you fire and how diligently you hire. There will always be higher and lower performers in the same amounts. The key is figuring out where you exist relative to your competitors. It is also worthwhile to consider how the normal distribution philosophy is negatively impacting your organization. Should you have a pyramid hierarchy? Should only the top of the top get paid significantly more when statistically there are many more high performers than you are recognizing? What do you do with all of the lower performers? But, more critically, why haven't you noticed them? Are they truly lower performers? #### Related Items [[Organizational Analytics]] [[Performance]] [[Normal Distribution]] [[Power Law Distribution]] [[Pareto Principle]] [[Management]]