Problems with Forced Ranking

Everyone: one of the big existential changes in management and leadership is a whole new model for talent.

Today, for the first time in human history, we’ve agreed to pay one person a $Trillion dollars for his skills (Elon Musk). And this trend is growing.

Google paid $2.7 Billion to hire Noam Shazeer, the co-founder of Character AI. Mark Zuckerberg paid around $100 Million to hire Jiahui You, a top OpenAI researcher. And others, Lucas Beyer, Alexander Kolesnikov & Xiaohua Zhai, were rumored to receive $100 M signing bonuses to join Meta.

What’s going on? What happened to our belief in the “bell curve” of performance, forced rankings, salary bands, and all the traditional ideas of talent management?

Well it’s time to throw that stuff out the window and think differently. As many researchers have pointed out, including Boris Groyberg from Harvard, these “hyperperformers” can deliver 100 to 1000 times higher outcomes than an “average” employee and their utility and value is very hard to reproduce.

Groyberg’s studies show that hyper-performers in one company turn into middling performers in another. And this is borne out by our research, which shows that individuals who fit the culture and behaviors of a company well can absolutely deliver 10-fold higher performance than those who “grind the gears.”

All this said, the traditional talent management model has not worked out well, and I want to encourage you to ditch it. Even the job market itself bears this out: some “10x engineers” make 5 times as much money as engineers sitting next to them, and the same is true for sales people, consultants, politicians, and athletes. (The top ten NBA players make 7X more pay than the “average” NBA player.)

So why do we try to “commoditize” this into a bell-curve based talent system?

Integrated Talent Management, as defined by HR, leads to over-hiring, layoffs, and all sorts of “performance commoditizing” effects. If you use the Talent Density philosophy, by contrast, you wind up with a smaller company which performs at a much higher level.

Listen to this podcast and I’ll explain all that needs to be addressed. Suffice it to say that in a world of AI-powered Superworkers, it’s your talent system (as a whole) that’s going to drive extraordinary growth and competitive advantage, not fitting people into the bell curve.

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Additional Information

The Myth Of The Bell Curve: Look For The Hyper-Performers

How To Create Talent Density

We Wasted Ten Years Talking About Performance Ratings. Seven Things We’ve Learned.

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