Mediocrity drift

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Mediocrity drift
(n.)
A curious, unintended, negative feedback loop of lazy human capital management.

Let’s say firms generally run a benign affirmative action policy, to increase representation. This means, when presented with equivalent candidates, it will prioritise “minority” candidates when laterally hiring, and “majority” employees when selecting candidates for a RIF.

Since one tends to laterally hire one at a time, but let employees go in groups, and since minority employees are, by definition, a minority, this creates an odd system effect.

This effect is predicated on three assumptions:

• That, generally, lateral quitters are relatively good employees,
• That RIF candidates generally aren’t,
• That abilities of all personnel, relative to their cost, are evenly distributed. Taken as a group, majority and the minority are about as good as each other; that is to say minority categorisation has no bearing on performance.

If so, then running our affirmative action system has an alarming and counterintuitive effect on the remaining population. On average, the majority will increase in relative value, while minority will decrease in relative value, even though no individual performance changes at all.

On second glance you can see why this should be so. The process systematically weeds out bad majority employees and good majority ones. The “good section” will progressively become majority-dominated — they are not being bid away as frequently — and the “below par” section becomes progressively minority dominated.

Two observations: here is systemantics in its raw natural state; and notice how pernicious the idea of the average is here. On average, the minority is paid progressively less. It looks like minority employees are being discriminated against on pay, but in fact they 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, and since by leaving they have marked themselves to market, they leave their old quincunx at the top and enter their new quincunx at the mean Your arriving at a higher cost than the ones you are replacing, they start not as outlier good staff, but average ones.