29 March 2012

Re: "Why They Haven't Been Fired"

Bryan Caplan posed three questions about firing unproductive workers:
1. What fraction of your co-workers are paid 125% or more of their true marginal product?

2. What fraction of these overpaid/incompetent co-workers can you personally identify?

3. Has the boss failed to fire these overpaid/incompetent workers because he doesn't know what you know - or what?
My first reaction was similar to the old "80% of users only use 20% of features" problem. That may be true, but they each use a different 20%. In this case, maybe 20% of your coworkers aren't pulling their weight, but would everyone agree it's the same 20%? Are the guys in IT an bunch of overpaid slackers because you never see them working, or do they never appear to be working because they're so good at their jobs that the servers don't break down that often necessitating highly observable emergency work?

Let's assume that's not a problem though. In a later post, Caplan highlights some really good insights from the comments.

I think a lot of the problems commenters raised could be minimized if more firms followed a suggestion I made to a previous Caplan post about firing aversion — put more workers on limited, short-term contracts rather than open-ended ones.
(2a) Wouldn't giving more workers fixed-length contracts ameliorate these problems? You still have to deliver the bad news that the contract won't be renewed, but it seems a lot better because the frame is that you're declining to give the person something, rather than taking away something they see as theirs.

(2b) Speaking of which, "your job" is only "yours" in the sense that "your girlfriend" is "yours." Employment is a relationship between two parties, not the possession of one of them. If more people accepted that we would have a lot less whining about foreigners "taking our jobs."
Similarly, linguistically reflecting the reality that "your job" is not your possession but a shared relationship between employer and employee would make firing less psychologically stressful for everyone.
(2c) I assume there are legal problems standing in the way of (2a) which I do not know about.

(3a) The mail clerk in our department recently "failed to pass her employment probation." I have a cousin who similarly failed a probationary period at a hardware store. Why is this not more common?
One other issue is whether you would actually get anyone better if you fired the overpaid person. If I was a manager for DC's Metro I could gleefully scour my department, sacking all the thieving, negligent, racist,*
Don't miss Ellis' post on WMATA's racism. Very well done.
corrupt layabouts. But what good would it do? The culture and institutions of Metro are such that they'd just be replaced by other thieving, negligent, racist, corrupt layabouts.

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