Peter Cappelli [Archive.org URL]

Do people who perform well always perform well? And people who perform poorly, do they always perform poorly? The reason this matters is because there is a very prominent theory in the practice of management — something that Jack Welch made famous — about the A-player, B-player, C-player model. The folks at McKinsey & Co. were making a similar case that there are really good executives and there are kind of lousy ones. The big thing you want to do if you believe that is to hire the good ones and get rid of the bad ones. If that’s the story, then management’s kind of simple, right? You just hire the good people, screen them and see how they do. If they do bad, out they go.

As far as we can tell, no one has ever looked at this before or at least published it. Are the people who do well always doing well, or not? If we know your scores this year for everybody in the company, how much of next year’s score could we predict or explain? If the good people are always good and the bad people are always bad, we can explain 100% of your scores because next year’s score will be identical to this year’s score. If it’s random, which would be kind of astonishing, then it would be zero. There’d be no relationship between how people on average perform this year and how they perform next year.

People in human resources guess 80%. The correct answer is 27%, so it’s way closer to zero than it is to 100%.

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