"Mediocre hires hurt you twice: they get less done, but they also make you big, because you need more of them to solve a given problem."
I would say Mediocre hires hurt you THRICE. Twice for the reasons you mention, and the third one is all the good folks leaving since they can't stand mediocre people.
One big company that seems to do well, at least from the outside is Semco in Brazil. Watch Ricardo Semler's "Leading by Omission": http://mitworld.mit.edu/video/308/ and read his book "Maverick": http://www.amazon.com/dp/0446670553. This is of course an anomaly since most companies don't work this way.
And note, this company (originally) had nothing to do with hacking or technology. If it works for a manufacturer of heavy equipment, in a unionized shop, how much better can it work in software?
I would say Mediocre hires hurt you THRICE. Twice for the reasons you mention, and the third one is all the good folks leaving since they can't stand mediocre people.
One big company that seems to do well, at least from the outside is Semco in Brazil. Watch Ricardo Semler's "Leading by Omission": http://mitworld.mit.edu/video/308/ and read his book "Maverick": http://www.amazon.com/dp/0446670553. This is of course an anomaly since most companies don't work this way.