Mediocrity drift

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“The bank emphasizes that staff will also be reduced through natural attrition, not filling vacant positions or offering early retirement.”

— Suisse Job Cuts are Causing Unrest, finews.com, December 2022

Mediocrity drift
/ˌmiːdɪˈɒkrɪti drɪft/ (n.)

A curious, unintended, negative feedback loop of lazy human capital management. If you don’t proactively retain good staff, and if you don’t actively manage out poor staff — if you manage by tactical hiring and “natural attrition” — the general quality of your staff relative to their cost will decline.

This is not just your correspondent’s usual curmudgeonly complaint — though it is that, too —but rather is a logical consequence of managing by natural attrition, at least if you accept three general assumptions:

Good staff leave by themselves: Staff with the gumption to leave tend to be relatively good employees, relative to what you pay them.

Bad staff don't: Conversely: those who aren’t much chop — who are already overpaid for what they do — tend not to quit, because they are onto a good thing, would need to find an even more gullible employer to hire them: consequently they will only leave if you make them, by performance management or through a RIF.

Subgroups are normally distributed: That all personnel, however you categorise them, are evenly distributed relative to the cost-value threshold, and that any given subgroup, however classified (except by reference to pure value) will be about as good as any other.

So, IT professionals as a group will be as good at what they do as will lawyers; young as well as old, men as women, and so on. Each group — IT pros, legal eagles, the young, the old, men, women — will within their own group have broadly similar distributions of outperformers and plodders.

If so, then a system which favours one group (group A) over another (group B) has a counterintuitive effect on the remaining populations of both groups: on average, the unfavoured group will increase in relative value, and the favoured group will decrease in relative value, even though no individual performance, in either group, changes at all.

On a second glance, you can see why this should be so. The process systematically weeds out underperforming members of group B and overperforming members of group A. The “good” side of the distribution will progressively become group B-dominated — they are not being bid away as frequently — and the “below par” section will becomes progressively group A dominated, as poor performing group B members are selected for eradication.

Two observations: firstly, here is systemantics in its raw natural state; and secondly, notice how pernicious the idea of the average is here.

On average, the group A is paid progressively less. It looks like group A members are being systematically discriminated against on pay, but this is not so (in this model, no-one’s pay changes) in fact group A members are being favoured for poor performance.

How your incoming lateral hires perform will remain to be seen but, remember, performance is measured relative to cost. Since by leaving they have marked themselves to market, overperformers leave their old slot in the quincunx where they were at the top, and enter their new quincunx at the median. The vicissitudes of random chance mean the new arrivals might wind up in any slot but, in any case, their slot on average will be normally distributed. Your arriving at a higher cost than the ones you are replacing, they start not as outlier good staff, but average ones.

See also

• Lateral quitter
• Reduction in force
• Competence phase transition