Re:Blizzard fires WoW Classic lead after he protests employe...
by 2b3a51 on Tuesday January 24, 2023 @06:28AM
(#34502288)
"These things are insanely noisy to the point of being meaningless."
Goldstein and Spiegelhalter did a paper on league tables for organisations (e.g. schools and hospitals) along the lines that noise in the data made the results questionable.[1]
Perhaps the idea transfers to individuals within an organisation that uses stack ranking?
[1] https://www.bristol.ac.uk/media-library/sites/cmm/migrated/d...
The problem with this is not the size of the bonus pool.
The immediate problem is the thresholding. Due to the sharp threshold, the bonus will practically never stand in proportion to performance. An employee that is judged to perform at a level of 6.1/7 gets nothing, but the one at 6.3/7 gets a lot. This makes the scheme anti-collaborative.
The less obvious problem is the ridiculousness of the idea that you can assign accurate individual performance numbers to people. These things are insanely noisy to the point of being meaningless. It ends up effectively a lottery. That would be fine if you called it a lottery, but by pretending it's not you create perverse incentives.
There are only two ways to do bonuses well:
- either forego individual bonuses and reward the entire company equally (or maybe scaled by salary) based on company performance, or
- hand out individual bonuses only to true (statistically verified) outperformers -- in this case you might end up not handing out any bonuses most years.