The reality is reviews are a part of a process, and your rank in them depends in part on the quota set by HR. Most of the time, HR wants employees to fit within a bell curve for rankings. In some extreme examples, people's reviews were based on a predetermined track and not on actual performance.

Netflix's policy is just HR marketing. If all you do is keep your 4 and 5, then what makes those people 4 and 5 will start to become 2 and 3. It's a moving goalpost, and sounds like an effort to increase productivity without increasing compensation.

I may be jaded.

I think GE was well known for doing a similar practice under Jack Welsch and they still had plenty of long-term employees. I don't think the system is particularly desirable though.

https://en.wikipedia.org/wiki/Jim_Pattison

... used to have a policy in effect in his car dealerships that the worst producing salesman would be fired every month.

For instance, this is remarked upon in this National Post article:

http://www.nationalpost.com/story.html?id=fb5f68f1-5946-4b46...

(search for word "salesman"). I think, no conditions were applied. Worst just meant not as many sales or as much revenue as the second worst salesman.

So I know eventually my ass will get fired. It's just a matter of when.

I don't really understand it. But it's how the industry works.

Edit: 8-12 is for unambiguously great attorneys. A lot of decent attorneys get shown the door after 4-6 years. People who can't hack it (usually because they won't put up with be worked like a slave) will only make it 2-4 years. A lot of people quit.

The downside is the average experience of your employee is going to be a lot lower, but that must not be the top goal of the law firms that employee this.

A young law-hopeful will face insane competition to get the relevant work experience and eventually get on a vacation scheme (2% success rate) [1]. Here they will do 2-4 weeks work with the firm they want to apply for.

Next, they need to apply again to receive a full training contract at that firm. Competition for these is even tougher (~0.5-1%).

Now, as part of the graduate intake (training contract) this person will be one ~100. Here are where well educated, nervous, fresh-faced young staff become the firm’s best workers - it's basically a two-year job interview. At the end of the two years, around 70 will be hired by the firm as new lawyers. From there another 20 will parachute[2] out per year. Of my brother's 35-person intake at a magic circle firm only two remain seven years on; many are in completely different fields. Around one person per intake will make it to the top - by this point they are the 1% of the 1% of the 1%. The entire business is structured to concentrate wealth in the hands of as few people as possible, with ludicrous hourly rates that junior staff never see, rigid seniority levels and the illusion of prestige.

Source: Brother at mid-sized magic circle firm + my own 3 months' subjective experience at two top-tier law firms before I decided to jump ship (I'm biased!).

[1] http://allaboutlaw.co.uk/law-careers/vacation-scheme/vacatio....

[2] A popular term in the field referring to the ease in which a lawyer working at a prestigious firm can move in to something less prestigious and a whole-lot more rewarding somewhere else. I met people applying for top firms with the sole intention of doing this.

http://www.lawfirmstats.com/firms/Willkie-Farr-Gallagher/all...

Newly hired attorneys make US 160k, while those 8 years in typically make US 280k.

There's a little bit of movement if you've changed firms, but there's a good chance if you work for a big law firm you're in this ballpark.

A partner's comp is structured differently.

combined: 175k for first, 380k for 8th years.

I have new hires; they take a LOT more supervision... and our group's output is limited to the speed at which our senior folks can originate projects...

But maybe law firms do not think this way..

But with stuff like writing wills, drafting simple contracts, entity formation, patent applications, etc. tend to have a shorter learning curve.

http://pastebin.com/KEQjYynr

A number of my boss's reports had landed in the achieves category for all of 2014, but nonetheless received a communication from HR this past April that they were in the bottom 5% of the company for 2014 and at risk for termination if their performance did not improve. This surprised my boss and the reports.

Obviously if you're in the bottom 5% you're well below average. The question is how you can consistently be ranked in the middle category yet nonetheless be in the bottom 5%. That would seem to make the quarterly ratings a rather pointless exercise for communicating to employees what their ongoing performance is.

This is not true.

If the bottom 50% are all very close in absolute performance, you get exactly the situation described, which is exactly the steady state of the process you desribe. The process is working too well.

I didn't find it stressful. Partly because I was never in danger, and partly because I knew what I was getting into. But I think it's a bad practice, mainly because it just doesn't work. Empirically what I've observed is a bunch of people in the wrong role, not the wrong company.

It's expensive to fire people: companies could save a lot by making lateral moves easier, and doing better internal matchmaking. As in matching people <--> responsibilities, not like... dating :).

Generally, you fill in the void with people who recently left competitors (who have the same attrition rates).

They want to be known as a place where only exceptional people work in the hopes that they'll get higher quality hires.

In reality they'll fire people for the same reasons any other company does

1) Project/Field 2) Name brand recognition

The game industry has a lot of overqualified people on very poor salaries in poor conditions because games are sexy. Google has both sexy projects and name brand recognition, which allows them to recruit top level talent despite the fact that their interview process is absurd and frankly, pretty insulting to qualified professionals (can you imagine doctors or lawyers going through similar processes?). Reason being, having google on your resume opens a lot of doors, and there's a chance you get to work on something really cool.

So I don't know anyone that works at Netflix, but I would believe they have mostly above average engineers not because of this bizarre practice of firing "average" people, but because they have enough recognition to find above average people in the first place.

Exceptional at politics and boss management.

Yea take a year, no problem!

But remember, we fire average people! Do average people take a year? You decide for yourself!

Though it does sound somewhat similar to the concept of "stack ranking", which a few companies (such as MS) are notable for having used as part of their annual review process in the past.

Stack ranking has always sounded to me like an absolutely poisonous thing to implement in an otherwise healthy office. But if the organization knows that it needs to implement a reduction in force regardless, then I guess it might make sense if management does not have a feel for who their best engineers are.

If you fire anyone below "market average", you can reasonably expect to sustain an above-average workforce as long as you compensate well enough to retain decent employees.

If you fire anyone below "corporate average", the results are more interesting. You'll bring up the average quality of current employees, but have to backfill the missing employees.

If your hiring is just a normal distribution on average skill, the result is that you quickly reach diminishing returns. You fire the vast majority of your new hires every year, while slowly turning over a few of the old ones in favor of new superstars. If your hiring is better than average, though, you can reach far high equilibrium points. In effect, it makes sense to fire all the employees up to your hiring midpoint, trusting that you can efficiently raise your average quality by doing so. After that, you'll have to cycle through too many employees per position to see speedy improvement.

Of course, all of this is crippled by training delays and the problems you'll face when "we fired half the employees last year" gets around. Interesting theoretical model, though.

What it reduces is the tendency of less formal processes to give raises to those who ask and to stiff those who don't and to throw up the "your salary is confidential". All those things it avoids are known to create a high potential for bad company culture and moral.

As I understand it individuals were stack ranked within teams, so even if a team outperformed the company or industry average, individuals were still tagged as underperformers.

And generally it became a matter of politics, popularity, and self-promotion, not objective competence - which is hard to measure anyway.

To me, it seems like a fast road to madness.

As for Netflix - I can't imagine any company needs to be staffed entirely by ninja rockstar code demi-gods. Many development projects are mundane and by the numbers, and basic competence is fine. If you want to be disruptive, hire a core of creative innovators who can code. They probably won't be ninjas, but for product development, talented customer-oriented innovators are a really good thing in any business that sells stuff to real customers.

By the time you're stack ranking, you're deep into large company territory... dealing with the above issues.

Medical equivalent: People taking cancer drugs have a higher than average likelihood of dying. However, that's probably a function of having cancer vs. the performance of the drug.

Alternatively: if you eliminate the "average" segment of your staff, then you fire their "average" replacements next time around?

Rinse and repeat often enough (and preferably with an incentive scheme that justifies average starting pay and ridiculous working hours with the promise of fantastic rewards if you manage not to get fired for the first three years) and bizarrely, you get a reputation for high standards.

https://www.reddit.com/r/cscareerquestions/comments/3fvss3/r...

https://youtu.be/DkGMY63FF3Q?t=10s

Deciding that you only want the best people is easy. Is there really a business out there who decides they want terrible staff? Determining who those people are is extremely difficult. Even if you are successful in identifying the best people, can you keep them? Whenever I find exceptional people, it takes more than 'not firing' them to keep them.

More realistically. Policies like these aren't designed with any idea of identifying or retaining talent. Instead they are usually a means to affect work culture. Like grading on a curve. It makes everyone work harder.

The interesting question for NetFlix will be how durable it will be as a structure. My impression is that it selects for the wrong attributes in management. But time will tell.

Any culture where a manager can explain away a bad quarter by blaming their underlings is already screwed.

If my team is strong bottom to top, I try to find soft landings for my lower ranked employees because...well making people successful is what good managers do and concern for people as individuals beyond instrumental value is also a positive trait and it just seems fair and right in a karmic sense of the world.

On the the other hand, if the bottom people aren't really strong, a good manager gets cover for going against their positive traits.

Forced attrition plans set up the dynamic that you find yourself in a pool of peers and you know that no matter what, every year one of you is going to get let go. You don't want it to be you, you know that you can be meeting all of the objectives of the organization and still be "the guy (or gal)" because no matter what, someone is going to get picked. My assertion is that bad managers, ones who embrace behaviors that good managers do not, can find ways to protect themselves at the expense of the good managers. It isn't good for the company of course, but the dynamic is already launched into motion. Given a very small epsilon that bad (in this case unprincipled) managers are probabilistically slightly less likely to lose their jobs, the system will slowly over time select for effective, but morally ambiguous managers. This is a very common evolutionary experiment folks run in simulation all the time. The smaller the epsilon the longer it takes, but it always happens.

[1] Sometimes that leads people astray into thinking it is their organizational structure, not their people, which accounts for their success.

If you put too much pressure on engineers to produce lines of code, they will optimize for that at the expense of quality/maintainability of the project.

I have worked for a number of startups which advocated the practice of 'cutting corners'. I think it doesn't work in practice because technical debt tends to creep up on you much sooner than you think. Unless the whole company's future is hinging around meeting a specific deadline for a specific feature, then there is no excuse for cutting corners.

I think the personality of the engineer is much more important than their skills. I have worked at companies that fired people after the first month - This is ridiculous.

You wouldn't fire a business executive after 1 month on the job because of poor growth metrics - The downtrend is probably a flow-on effect from past periods of mismanagement. This is exactly the same in engineering. You can't measure the consequences of technical decisions until many months of even years after they are implemented.

While you might think you're firing 'bad engineers' - You are in fact just firing random engineers based on random events like market timing, which team they are part of, direction of the wind, phase of the moon, etc... Just chaos.

There where plenty of fraudulent abuse of this system and in the aftermath, I guess it would have been better to flip a coin!

In such a system, the performance measuring as such, is undermining the corporate culture.

I'd rephrase that to be– do you work in a team with uncommonly high standards? I'd imagine this to be the case at any cutting-edge company. Consider say, the special forces in any military. If you don't meet the grade, or you don't carry your fair share of the weight, you don't get to stay. That's just tha name of the game. I assume that this must be the case at all the exciting companies– Tesla, Google, Apple, Facebook, etc etc.

It's not stressful if the expectations are set in advance, and the precise conditions for firing are clearly stated, and you get the feedback and assistance you need to stay afloat.

I work with a small team that prides itself on being results-oriented, and I love it. As far as I can tell, everybody we hired is hired because they bring their A game.

I'd much prefer this to being a part of a team that "carries" people who don't perform.

Of course, we've all also heard horror stories by now of ridiculous young founders who come up with extreme ideas about productivity, 80-100 hour work weeks and whatnot. Sustainability is important.

To your point, I work for a sales organization. It doesn't matter if your performance reviews are outstanding. If you go more than a couple of weeks without results, the director of sales operations begin sending you nasty emails. Within a month after that, your escorted out the door.

This might be just the sales world, but at some point people deserve to be treated like human beings. Not like replaceable cattle.

The question is of course if all the "A Players" live and breath the company, voluntarily coming into the office on weekends, doing conference calls at 4AM etc - and you are the kind of person who values their family for instance, and wants a little work life separation, what score do you get? What happens if when offered a year long paternity leave, you actually take them up on it? How hostile will the environment be at the company when you return? Or what happens if you have a medical problem that impacts your job performance? And so on...

But, to answer your question... I once got sucked into a management overhaul at a company that used Netflix-style topgrading as justification for a wave of layoffs. The whole self-deportation aspect of it doesn't work very well - people dragging their feet in a job are often reluctantly there because they need things like medical insurance, have bills to pay and families to feed. Being able to just up and voluntarily quit a job because you're "not a good fit" is a luxury. So everyone who was a "B Player" (aka in a role that wasn't well defined) got put through hell for a month then fired, and then the remaining "A Players" lost morale and took up the voluntary quitting aspect. So basically it backfired into brain-drain and a chronic "A Player" retention problem.

http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d...

I think the NetFlix strategy is partly a response to this.

People pretend there is a 10x difference between programmers. I assure you that is way too low. The difference is actually Infinite, because contributions can be negative (I've seen a bad programmer set back a project by 6 months). Even worse, a programmer can create a toxic atmosphere, causing good programmers to leave.

I like the NetFlix strategy. Some people are just a hell of a lot more productive than other people. (Example: http://bellard.org/ )

Exactly. There's also the case when someone is highly productive but only for themselves. They create all their own tools, their own environments, their own platforms, they follow their own homemade software development practices, use their own testing tools, and none of it integrates with the rest of the world. But, because one person made everything, that single person is super productive (as long as they never step outside their own platform). They don't need documentation because they made everything from the ground up and their systems reflect their personal brain state.

Then you have to ask, even though one person is 10x, does it really help if nobody else can integrate with their work? Then every request, feature, bug fix is a bottle neck of 1 person no matter how much outside help you give them.

Your link also relates a lot to social platform evaporation: http://blog.bumblebeelabs.com/social-software-sundays-2-the-... — all the good people leave because too many mediocre people become a burden. Now you're left with a platform for ants.

- I would argue that the way this guy thinks is a personality trait. I like the way he thinks. Does this mean, if you are going through some tough time in your personal life and can't put in as much hours, places like netflix is not for you?

That depends which average. The usual "average" (arithmetic mean) isn't defined in a way that any actual individuals in the sampled group have to be at the average. (Some other "averages", like the mode, must be represented, but even with the mode it only is the most common single value, its quite possible, and normal, to have more not at the mode than at the mode.)

While empirically lots of things are distributed so that the area near the arithmetic mean on the most common scale is most heavily populated, there are cases where that isn't the case on any scale, e.g., bimodal distributions where the values cluster at two extremes and the average is somewhere between them.

> You can only be exceptional compared to something that is not exceptional

Yes, but a firm could in theory (if it could measure performance of its own staff and in the marketplace accurately enough) fire people who are at or below the market average, and only retain those of above market average performance, and everyone there (that survived those performance reviews) would be (by their most recent measure) above average -- exceptional, in that way -- for the market. (And this is true for any definition of "average" you want to use.)

This seems to be what Netflix is suggesting that they do.