How much does performance differ between people?

Abstract

Many jobs have vast differences in individual performance, resulting in a skewed distribution of achievement. For example, among firms funded by Y Combinator, the top 0.5% of firms account for over ⅔ of the total market value, and among authors of bestselling books, the top 1% stay on bestseller lists 25+ times longer on average than the median author. This disparity raises questions about how to predict future performance and identify top performers. Researchers performed a shallow literature review and formulated theoretical arguments regarding this topic, finding that ex-post performance often appears “heavy-tailed” across multiple domains, indicating that the top 1% of performers may be responsible for up to 80% of total output. Ex-ante performance also exhibits heavy tails in some domains, such as in scientific citations and awards. However, there is a lack of direct evidence demonstrating whether performance is heavy-tailed or not in typical jobs. The researchers posit that if ex-ante performance is determined to be heavy-tailed, organizations may opt for a more targeted approach to identifying top performers. Critically, organizations should not treat “heavy-tailed” as a binary property, but rather should focus on the specific frequency and outcomes associated with high performers. – AI-generated abstract.