Good Employees, Employees Who Leave and Predicting Performance Improvement

Level 2 - Value Investor

Welcome Avatar! Today, we’re doing a bit of a stream of consciousness post on Employees from both a hiring and observational perspective. If you’re an employer simply flip the logic around. For example, if you have a top top performer who is always going “above and beyond” it is safe to assume you’ll never get the “surprise i’m out!” message.

In a worst case scenario you’ll be forced to match competing offers but beyond that the person who is a team player giving 110% is a Corporate person for life.

It’s just the way it is.

Part 1: Ideal Employee

The ideal employee is someone who always finds ways to take on more responsibility. This is because they are lining themselves up to replace the next layer when tough economic times come around (like now). Despite all the negative news about layoffs in Tech and Wall Street, anyone at these firms knows that a huge number of promotions also occur. They have to keep morale up. So. Those top 10% people get highlighted in company wide promotion emails lists (so and so has been appointed as VP/Director/MD/Head of XYZ).

Remember the 10x Engineer?

Well, if you’re in this camp, you’re an ideal employee (except for the 0.1% exceptions to the rule who leave).

Risk Aversion: The ideal employee is too risk averse to ever go off on his/her own. This is why they are willing to go above any beyond. They are too worried about losing their ranking as the #1 employee at the firm. While there are rare cases where the top employee leaves, this is the exception not the rule (guys like Frank Quattrone who go off and start their own companies)

An easy tell for the ideal employee type is the person who refuses to take long vacations of more than a week at a time. They try to add one day to 3 day weekends. They want complete control over the most meaningless tasks so that they are next to impossible to fire. If they leave for more than a week or so, they open up risk for *gasps* someone else doing the weekly update report that no one reads.

Extreme Focus on Politics: This is hard to explain until you see it. They obsess over who is where in the “pecking order” to a level that nears Gossip Girl drama. Once a person is obsessing over which person is most liked at every single level: entry, lower middle, middle, upper middle and upper management, that person will *never* leave corporate life. Honestly, never seen it.

Once you’re so obsessed with company politics that you’re worried about the people lower on the food chain as well, you’ve entered the worm hole and there is no escape.

The good news? If you’re in a managerial position, you can get these people to show their cards pretty easily. You tell them so and so is good (below their level). If they go out of their way to sabotage their work = they will never be good managers. If they try to “link up with them” by agreeing and amplifying their work, they will likely be good managers.

The smart managers know the goal is to always work with well liked people (even if they are lower on the food chain). Pretty obvious where they stand once you make a single comment. The last person you want to promote is the guy who says every new hire is terrible. What does that say about their ability to hire competent workers? Exactly.

Doesn’t Short Cut: This is impossible to catch *work wise*. That’s right. If you have two employees 1) that figured out how to short cut and 2) one that doesn’t short cut… there is no way to know which is which. Why? The smart one (short cutting) has figured out a way to do his/her job 20-30% faster and isn’t foolish enough to say anything.

The answer is in the hours they are around. Since you won’t figure out how the smart employees are short cutting everything, you can at least pinpoint the extreme rule followers (no short cuts). The one who is sticking around an extra 5-15 hours a week is the one following that dated employee handbook to the T.

Never Going to Start Something: Another sign? They are aggressively building out Linked-in. If you’re investing your time in Linked-in, the message is clear. You’re a corporate type.

This makes logical sense. If you were busy doing something else you wouldn’t be on Linked-in getting to thousands of contacts. You need thousands of contacts on there so you can get Head Hunters, competitors and clients all in one spot. The more active someone is on Linked-in the more likely they are to be a forever W-2.

The message they are sending? They are using Linked-in to get that 5-15% promotion/counter offer in the future. It really is that simple.

Never Negative: This is the last sign. Saying negative things about people = bad for your own job. They are always positive. If you ask them about a low performer expect them to say “so and so is great to me but I don’t work with so and so that much”.

Anyone with basic math skills realizes that if there are more low performing employees, they are a lot harder to cut. So? They never say anything bad.

We’re in before all the cope and nonsense about “it’s not good long-term for the company though!”. The reality is that every single person is replaceable within a few short months. Any bad hire is not going to break a multi-billion dollar company. You also don’t get credit for getting people fired. You get credit for getting people hired who exceed expectations. Never seen a finders fee for getting someone fired. See tons of commission checks for getting people hired though!

Therefore, the ideal employee never says anything negative about anyone at the firm. The annoying phrase is “one team, one dream”, where the team has a goal of making the owners dream come true (but that’s a topic for another day).

You Should Puke After Seeing This if You Want to Go Off on Your Own Later

Conclusion

Ideal employee: 1) never says anything negative about anyone, 2) takes politics extremely seriously and does everything to be linked to well liked people only, 3) never really takes vacation, 4) does everything by the book - hence long hours and 5) extreme risk aversion highlighted by constant use of Linked-in praying to get that 5-15% pay bump.

Part 2: Employees Who Leave

There is no real point in discussing the employees who are simply bad. If you’re not able to copy paste numbers from an SEC filing into excel, you’re probably not going to make it anyway. Anyone who has worked in the corporate world knows that after a couple of years or so, you will figure out the game is more about mediocre work and being well liked. As long as you’re not doing outrageous things like not responding to clients or sending out emails with blatant errors, you’ll be good to go.

One Foot-in, One Foot-out: This is just one way of describing the performance review. The message should be as follows “You’re doing great work it just doesn’t seem like you’re giving 100%. Is there anything we can do to help you give it your all”

This is not an exact phrase but the essence is there. They know you’re doing good numbers (since it will show) and they also know you’re not giving it 100% since you’re not particularly interested in doing all the meaningless meetings.

The easy way around this is to always ask for “more meaningful projects”. This is just your way of intelligently making sure you’re even harder to fire. The company has no choice but to give you the higher value work since they have two options: 1) ask the #1 guy to do even more - unlikely since he already tries to do that and 2) give it to the guy who can’t even balance a balance sheet from a 10-Q. Think we all know how that ends.

You end up getting the meaningful work which leads to a sprint, stop, sprint work environment. You’re going to have to do work here and there but they will remove the junk work from your to do list to see if you’ll “give it your all” (whatever that means).

If you’re sharp, you’re going to find short cuts that no one will notice and free up additional time. Since your work load is only revenue generating items and all is running smoothly they will be happy with it. But. In the back of their heads they know you’re still not 100% there because…

Low Social Media Profile: This is probably the #1 way to catch good performers who will leave. Without a serious Linked-in presence and without a serious social media presence, how are you being a good “corporate citizen”. You’re not doing anything to amplify the firm and you’re not doing anything negative either.

Honestly, this is probably the biggest tell. Mega firms have employees dedicated to online sleuthing. They want to make sure they can fire people if needed (no severance!) and they want to make sure their brand/image is not being damaged.

Quite an interesting tell but it’s one of the biggest. If you’re not giving it your all and you don’t have a social media profile taking up your time… what exactly are you doing? They can’t say you’re out partying since there are no photos of you at clubs/on yachts and they can’t say you’re doing anything wrong since you don’t have anything searchable online. If pressed on this the employee has an easy out by saying “I don’t want to risk anything with an online presence” obvious nonsense but they are trapped and know it.

Generally Seen as Off: Since the employee is not doing everything to be the top of the top, this person will be talked about (behind their backs of course). No one in the corporate world has the guts to do confrontation. So. Everyone with the same title will just make fun of the person saying how “weird” they are. (if this is you congrats, you have a high chance of making it so far!)

The interesting thing is that their interests will also be “off”. Since you need to learn a wide range of skills to become an entrepreneur it means all of your interests and hobbies won’t line up with the masses. This is a huge tell.

Anyone who has bothered to even buy a single domain knows that building a client/customer base is maximum pain. This off color analogy NSFW (best read on smartphone) explains the process.

Major companies already have customers and a client base so learning how to get 5-10 initial customers is not really of interest for the firm. In fact, if you’re at a larger firm you turn *down* work since it’s not big enough to justify the effort.

Wondered why most skills are not transferable from entry level professions to starting something? Now you know! Why would a mega firm teach you to build a client/customer list? That would guarantee you leave. Can’t have that!

Towards the End, Called Crazy: When the person is close to leaving, the new narrative will be that the person is “crazy”. This is because the employee is doing good enough to deserve promotions here and there but it is becoming more and more apparent that the individual just doesn’t care.

There is a clear transition point here. Once the employee has gone from weird to “crazy” this means the mannerisms have been accepted by the firm. Once known as the crazy person (yet getting paid well) the firm has officially decided you’re good enough for revenue generation but are not “management potential”

Congrats! At this point, if you’re that employee, you can do even less since the firm has given up on “fixing you”. As long as your numbers are good, it is clear sailing from here on out.

There is just one problem… You’re probably going to quit shortly after.

If you survived this long, it likely means your exit strategy is near completion.

Conclusion

Employee who leave exhibit the following characteristics: 1) they have minimal social media profiles, 2) they find ways to short cut work without anything visible, 3) they don’t volunteer for anything mundane, 4) they are seen as off which transitions to “crazy” later on and 5) at this point the employee is going to leave shortly.

Part 3: Predicting the Trajectory

Now you’re probably wondering how you find out who is going to end up where. Well, this is kind of the goal for you as a person.

Early Life: Unless born into a rich family, you really don’t have a peer group with a high chance of success. Just be realistic about it. If you’re in a lower-middle area or so, your friend group is by default vs. by design. Note this is why your past is largely meaningless, no one you meet until around College age is likely to be around unless you were lucky enough to start in the right zone.

After early life, you are sentient enough to analyze your peer group and the excuses need to disappear. Your peer group should become successful over time, just like you.

Around 18+: Somewhere in this range the game really begins. It is up to you to really figure out who is going to be someone and who isn’t. Sure you can have childhood friends that you see from time to time, but your real goal is to predict the outcomes of your peer group. If you can’t predict the outcome of people you see every day, it will be next to impossible to predict the outcome of strangers when you need to hire people! Funny how that all lines up.

If someone is unable to predict who the future winners are with hundreds of hours of information, how can they possibly predict the performance of strangers based on a few hours of interactions. It’s all interrelated.

General Process: Somewhere around 2-3 years on the job and you’ll know who is who. At this point you’re accustomed to the work environment and you’ll end up in two paths: the corporate life or the equity building life. You want to do everything you can to be in the second path unless you want to work into your 40s/50s while asking someone else if you can “go to your kids baseball game” or not. (sad living, no time freedom)

Here is the evaluation toolbox:

• Self Aware: Around 90% of people will fail this. Can the person self assess their own strengths and weaknesses without emotion? If so they have a huge chance of making it. If the person is constantly in denial saying they “could have done something” then they are likely going to be in corporate for life. They have fake confidence not real confidence. Real confidence is the ability to admit to yourself when you’re not talented at something.

  • As stated many times, if someone “really could have done something” they would have gone all in on it. They wouldn’t do it at 80% effort to fall back on some excuse. They knew they couldn’t and just want to play fantasy

  • For the record we’d never be good long-term corporate employees hence the emphasis on doing 80/20 on the job (hilarious how that also lines up!)

• Autonomous: They shouldn’t be easy to sell on anything. Instead they should be practical and genuinely curious about new things related to business. A good tell is if the person finds weird niche knowledge constantly. This tells you that their spare time is researching niche topics vs. binge watching Netflix or memorizing sports stats

• Time Rich Focus: The corporate types are more concerned about their image. This is why they focus on zip codes, politics and titles. The people who end up getting rich are obsessed with freeing up their time. This is why they do 80/20 at work. They know they need the time in order to get out over the long-term. They focus on things that will free up more and more of their time until they eventually don’t need an alarm clock

• Uninterested in Comparisons of Trajectory: If you hear the phrase “I’m behind!” just assume that’s another corporate person. Corporate people compare their earnings to everyone else their age. They ignore things like… you know… actually solving problems. They will ask you things like how long did it take you to make $$$ or how long did it take you to get ____ customers. This is called day dreaming.

  • Anyone with good self awareness will know that it’s not a useful metric since the talent and skills acquired will be entirely different. Some people are more talented than others. Therefore comparing yourself with different skills and learning curves is a waste of valuable time

• Willingness to Go Back to Go Forward: This one is a doozy. The absolute #1 predictor of success is willingness to go backward to go forward. There is *no* way to know this unless you have hundreds of hours of interactions with someone.

  • Say you have a golf player who swings incorrectly for 3-4 years. At this point they have learned to play well but if they learn to make adjustments their performance would improve dramatically. There is a catch though. If they fix their swing they will play *WORSE* for a period of time.

  • Are they willing to do this? If so, you’ve found yourself a huge future winner and we’d go all in on them. If they are not willing to do it (around 99%), you can assume they will never hit their ceiling. Ever. No chance.

Throwing Spaghetti Against The Wall: This is the last one. Someone who is unwilling to risk $200-400 to start a website is certainly never going to make it to the big leagues. Especially if they think it’s better spent investing in dividend stocks.

What we’ve noticed is that people who end up succeeding have at least 5-15 completely crazy ideas that have failed. The key is that they learned at least something from it. While it is true that most “businesses fail” this ignores the huge amount of learning even if you blow $5K on your first set of failures. We all know with certainty that every single one of you reading this website have spent at least $20,000+ on stuff you regret. The details of the skeletons in your closet may be hidden… but everyone smart knows they are there!

Conclusion

Now you have a laundry list to evaluate your own peer group. If they fall heavily into the yes category on the checklist above, you’re in good shape. You’re on the right track even if you think you’re going nowhere. Speaking of going nowhere. Even if you think that’s the case, you’re likely underestimating the progress.

Improvement is non-linear so you’ll eventually hit the knee in the curve.

BowTiedBroke Net Worth Progression (source)

Elon Musk Net Worth Progression (a mere $175M in 2002 until kaboom)

Are you going to end up like BowTiedBroke or Elon Musk? Something in-between? Who knows. Just remember that if you’re stuck thinking in terms of anything linear, it just doesn’t work that way.

Lots of nothing, then everything at once. Just be sure to live through the hedonism/dopamine rush phase. Many blow their first winnings, crash and never recover! Don’t let it be you.

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