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Since joining the workforce in 2019, I’ve been repeatedly surprised by the degree to which “Talent” conforms to a power law distribution.
Now, what I’m referring to as “Talent” here is not the Elon Musks, the Jeff Bezoses, or the Bill Gates of the world. Obviously, I wouldn’t expect to encounter this caliber of talent with any regularity, if ever in my lifetime. What I mean by “Talent” is a broader term for high-performing human capital.
In my short professional career (<5 years), I’ve been a part of roughly eight different teams which include exposure to hundreds of employees. Yet I’ve only come across three (maybe four) of what I’d characterize as “All Star” talents.
What do I mean by “All Star” talent? I mean those unique individuals that have a diverse, well-rounded skill set and consistently produce exceptional work. These people seem to have it all. They’re articulate in communication, strategic in thought, and perceptive in understanding the complexity of what might seem like a simple problem on the surface. They’re ambitious with timelines, knowledgeable in their domains, and (what often stands out as a key differentiator is) they are highly proficient relationally.
The thing is that while these “All Star” talents aren’t geniuses by any stretch of the imagination (and which even they would admit to) they are incredibly rare.
I’m familiar with the 80-20 rule - the highly un-intuitive but surprisingly ubiquitous power law phenomenon whereby 80% of outcomes can be explained by a mere 20% of causes. The 80-20 rule is known for explaining things like real estate ownership, population density, and the distribution of wealth. [1]
For someone like me, who’s familiar with the rule, a natural prediction might be that the 80-20 rule applies to talent as well. For example, one might inuit that 80% of a car dealership’s sales is generated by the top 20% of its salesforce. Or, one might predict that 80% of an investment firm’s profits can be attributed to the ideas of its top quintile of analysts (the top 20%).
But, in reflecting on my own professional experiences (which I’ll admit are biased and limited), talent appears to exhibit an even more extreme power law distribution. In fact, it seems like for most organizations 80% of positive business outcomes can be explained by something far less than the top 20% of an organization’s human capital - perhaps even less than 5%.
For those that have interacted with “All Star” talents before, this conjecture shouldn’t sound outlandish. The difference in working with an exceptional talent compared to just a “good” employee is night and day.
In reflecting on talent scarcity given this backdrop, a few thoughts come to mind...
First, I could simply be wrong about my suspicions. Maybe the 80-20 rule does actually hold and my guesstimate that “All Star” talent is even more scarce than the 80-20 rule would suggest is a miscalculation.
Second, regardless of the accuracy of my suspicions, another surprising learning is that most organizations have an unexpectedly high tolerance for underperforming human capital. [2] It’s crazy to me that companies don’t more strictly adhere to a performance-first culture but instead tolerate underperforming employees for prolonged periods of time.
Third, and perhaps most interestingly, the role that internal motivation plays in producing an “All Star” talent cannot be overstated. It’s true that there are many people incapable of performing at an “All Star” level simply due to inherent limitations - be it intelligence or EQ proficiency. But more often, I see quite capable individuals fall short of excellence because of lacking motivation. It is not an issue of ability or intelligence as much as it is one of drive.
In the end, all my learnings on talent circle back to the motto, “hire slowly and fire quickly”. From what I can tell, hanging on to low-quality human capital suffocates an organization over time. On the flipside, exceptional talent almost always seems to prove their weight in gold.
1 // A more relatable example of the 80-20 rule might be that 80% of points scored in the NBA are scored by just 20% of the league’s players. Note: this is just an example and I have no idea if this is actually true but you get the idea.
2 // The most obvious rationale for why companies are willing to hang on to under-performing talent is the psychological and emotional turmoil involved in layoffs (for both parties). It’s probably 10x harder to fire an employee than to higher them.
3 // I came across this Jordan Peterson video clip after writing this piece. In it, Peterson refers to Price’s law which aptly characterizes my experience with talent in the workplace. Price’s Law states that the square root of the number of people in a domain do half of the total work. So, as a company grows, a smaller and smaller fraction of that company’s workforce does most of the work. (Ex: In a company of 100, 10 people are responsible for 50% of the output. In a company of 10,000, 100 employees (1%) do 50% of the work.)
