We all have gone through this many times: putting our colleagues in “average” category despite being aware of how good they’re. The Bell Curve system of performance appraisal intimidates HR managers as much as employees. For a long time this forced ranking system has remained a topic of debate, but companies still continue to use it. Why? Because in the eyes of leadership teams it rewards top performers who create most part of the value for their companies. In simple words, they continue to use it because it benefits them. But is that really the case? We try to figure out in this article.
Understanding the Curve
The Bell Curve performance appraisal system is based on the premise of Bell Curve in Statistics, which is also known as Normal Distribution Law. According to that phenomenon it assumes that in an organization there’ll be a few employees that’ll be high-performers, and a few employees that’ll be extremely low performers. Majority of employees will be in-between, the category known as average performers. The ratio of percentages adopted for low:average:high varies among companies: a majority of them adopt the ratio of 10:80:10, while a rare few adopt 10:70:20.
Bell Curve: Advantages
A major advantage of Bell Curve appraisal system is that it rewards high-performers, thus giving them more encouragement to work harder for the goals of company. On the other hand, it can also help in identifying the suitability of jobs for individual employees (if done the right way). It also helps in managing leniency of HR managers while rating employees and forces them to rate people strictly.
Another advantage of this system is that it’s easy to implement in comparison to other performance appraisal methods, thanks to HRMS software vendors who have included it traditionally in their products. If you want to implement some other method of performance appraisal, your search for Human Resource Management Software may get a bit more difficult.
All of this, as you may expect, helps companies in achieving their goals easily.
Bell Curve: Disadvantages
We just saw how Bell Curve system helps companies in achieving their goals. But how many of those goals are actually achieved because of it? It seems not a lot. Despite the advantages this system provides to a few high-performers, there’re many reasons due to which this model doesn’t do justice to the employees as well as companies. Research has suggested many times that people’s performance doesn’t follow the law of Bell Curve, which means it’s quite possible to have more high performers in your company than the percentage that you’ve allotted to the “high performers” category of your bell curve system. By forcing your HR managers to fit only a fixed number of employees in that gradient you may be discouraging the remaining high-performers (or good performers at least) who could have brought more business to your company.
Final Thoughts: Is it Relevant Anymore?
Despite the large number of companies that continue to deploy it, a few industries have already realized that this performance appraisal method is not good for them. IT is one of them: Google, Microsoft, Adobe, IBM, Infosys, Mindtree, TCS and many others have already dropped this performance appraisal system for alternatives.
So ultimately, it’s up to you to figure out how much this system is working for you. If it’s not working then you should replace it immediately for the good of your company.