Cycling out the bottom

Microsoft's performance model has made the news a number of times. Recently, there was the perception that those getting the lowest reviews are insta-fired. I'm certain this isn't completely true, but there's some validity to the statement. This, of course, pisses off the "all-star degenerate case" supporters. In reality such teams don't really exist, but let's say, for the sake of argument, that everyone on the team is really good, and the bottom guy out of, say, 30, gets axed and replaced.

Naturally this sucks for the last-place really good guy. He needs to go find a new job. But remember, he's really good, right? So he should have no problem, really. Unless he's not, in which case perhaps the replacing was warranted.

Let's consider this from the company's standpoint.
There's really no way to grade/verify 'absolute ability'. In fact, this is a ridiculous concept. You can have a collection of very good engineers, generally speaking, but their relative strength will depend on the particular projects/work the company does. They have no other alternative than to stack them by "what impact do they provide me". Even if you could assign an absolute score, you can't just say "everyone over 85 stays" because you may not be able to get enough 85s, or you can find them in droves.

Consider a football team. There are 53 guys on the roster, the last 10 or so of whom are consistently in flux. These guys are all elite players on an absolute scale, but the bottom 10 don't make nearly the same impact as the top set, or are limited in up-side. It's clear that roughly that level of quality is easy to find. Since these bottom 10 guys aren't making an impact, your odds are better by taking a shot at someone else. Based on your demonstrated hiring ability, the replacements should be at least about as good and there's a chance they'll be better. And no fan has an issue with this because football's all about results.

Now back to Microsoft. They have a demonstrated ability to screen hires to a level where 29 engineers are better than the worst 1 (this is simple math, but putting it this way proves that 97% of their hires are better than the guy about to get fired). So they let one guy go, and have a 97% chance of replacing them with someone better. And oh yeah, Microsoft (and every other company) should be (and is) all about results. Why should this be different than football?

The real trick is to find the proportion to let go each year, based on the rate of hiring and growth.