Bell Curve In Performance Appraisal

Hi Naveen

When I said it is difficult, I did not mean forming a bell curve. Even with three people, we can form a bell curve. Is it not? But applications of certain priciples like remunerations will be difficult to follow as the risk involved is higher.

Say there 10 marketing people in a company, you may not like to lose 2 peoplejust below average person If you have many such groups of hundred, losing two persons in each department or each area will not be an issue.

Moreover, in a very small set up, some seniority will also be considered. Bell curve will not be beneficially implemented.

Take a typical marketing set up

Take 4 regions

and every region having say 200 sales peoples

UIf you apply this logic, you will get say 20 people to be eliminated

It may be a big number and here the Top policy making body should interfere and say 10 people to out or 30 people to out or 20 to go out.

But in a small organisation with just 200 people taking this decison will be tough

You want more clarification??

Siva

Naveen
To answer your second question, neither seniority nor the expertise is taken into consideration in the initial formation of the Curve
You just take the actual performance. and distribute people in the curve.
Once this is done we examine who are the people in the elimination list
This needs to be examined carefully.
Then a policy decion for the year need to be pronoced
The company can have a policy say any employee with more than 10 years needs to be cleared only by the steering committee
Siva

That was a good explanation siva.
BTW we have completed the appraisal for 2007 and it was real cumbersome thing as it was not organized properly.
What are the things to be done (like PMS or KRAs) on a monthly basis so that we can do a better apprisal process in 2008?

Dear Naveen

Dont do anything on a monthly basis. It generates unpleasntness and we spend more time in resolving this. Monthly business reveiew is good That will indicate personal performance.

We used to follow the steps as under9Assuming that the year starts in April)

1 Finalise KRAS and KPAs in Feb and March

2.Document these KRAs and KPAs and handover a copy to individuals.

3.Freeze these KRAs and KPAs at the time of Perfformance Counselling in June

4.Have a review and course correct at the time of Performance counselling.This helps a lot. We do not talk about the past we also talk about the future. Those who have done not so good can also be motivated by future prospects.

5.Review/appraise in July. To be done by the Operational Incharge/HR and Business head. A business head can do for two hundred people in three days time. This becomes very critical.Atleast one level above the immediate boos should sit on this exercise

6.Ninth month review nly by operational head. and document the outcome. Any revision of KRAs and targets need to be documented.

7. HR to commence policy formulation activities for the year by Januray.

All operational Heads/Business Heads to be involved. This will address what will be the pervcentage in different ratings and also difine ratings

Eg Target is say selling 100 crore goods. Market has already taken 100 crores due to demand, then Marketing efforts are not great. All would have done more than 100% You can noit rate all of them A

Similarly market has slumped and you have done only 50% in january due to market conditions, we can not say all people are bad, internally look at all these issues and defin e the ratings for the year

This is crucial exercise HR needs to do. This is very critical in using Bell Curve. Defining the Rating involving people across has to be done with a professional approach

8. Having done this, send out Appraisal forms9hard copy or soft copy) with clear understanding of definitions to all Transparency is required and all people who are to be rated should also know this.

9. Then receive appraisals back in April

10. Unit HR shall help consolidating data and point out to business Heads the deviations. Unit Head shall make corrections and he should ensure reasonable Bell curve.

11. Recommendations reach the Corporate HR Committe comprising of all business heads and ceo with HR and Finace head looks at the numbers,variations, selectively discuss high ratings and low ratings. Corporate HR makes comparisona of different units and brings in uniformity in the numbers across the organisation If some specific business gets rewards more then the Committee looks at business results, decide this group has contributed more and hence deviations are allowed.

In a nuyshell three important stages are to be carried out

1. Performance counselling to be used as finalising KRAs and KPAs

2. Definition of ratings every year based on performance of the Company, the industry and nation as a whole

3. Top level committee to decides the final percentage in various functions based on their performance in comparison with other functions/business units

I am writing evrything as I recollect from what I did. This requires some language corrections and flow corrections.

Siva

Hi Siva,
I was just browsing thru the answers given by u... on bell curve..
its very interesting...
can u help me with more inputs on bell curve..
how is formed..
i dont have the exact way of doing it
i used it last month.. but didnt really know.. how to go about
are the rating in the PA told to employees?
is the bell curve showed to employees?
and many Percentage hike do u think is fine, based on the score..?
sorry if im confusing u too..
im 1 yr old in HR generalist.. but in all 4 yrs exp... dont know much of HR functions though...
your help will be highly appreciated..
Thanks
Geeta

Dear Geeta
How big/small is your organisation.
I dont mind giving certain advices from here and see how it works.(No charges)
If interested reply to my personal email id.
Siva

Dear Geeta
Have normal appraisal.Training is very critical
Finalise targets/KRAs and KPAs First.
Or if you have recd appraisalsfor this year, send the list with out names but departmentwise and levelwise.
Then I can send my inputs. You can send in my private id
Siva

" The time has come to broaden our notion of the spectrum of talents.The single most important contribution education can make to a child's development is to help him toward a field where his talents best suit him, where he will be satisfied and competent. We have completely lost sight of that. Instead we subject everyone to an education where , if you succeed, you will be best suited to be a manager. And we evaluate everyone along the way according to whether they meet the narrow standard of success.We should spend less time in ranking the people and more time helping them to identify their natural competencies and gifts and cultivate those."
These are the words of legandary Howard Gradener.
Hello ..all HR OFFICERS/MANAGERS/GMs/VPs...
Are we doing this since this is what is expected when we say HR...
But we concentrate more on axing the people and judging them for their poor performance....[/b]

hello siva sir
The explaination u gave 4 the bell curve is very useful n also u seem 2 b very helpful.keep up d same attitude
regards
saakhi

Hi!

Let me just add and clarify some points on the explanation of Siva on the Bell Curve and Forced Ranking.

The Bell Curve usually refers to the "normal distribution curve". The word "bell" was derived from the actual appearance of the curve. Indeed, when all statitistical quantities are correctly distributed within the curve, its appearance will look like a "bell".

The quantities allocated by Siva in his example (20-70-10) would never result to a normal curve. Such statistical configuration is a "eschewed" curve even if viewed from any direction or angle. The normal distribution curve used by many multinational organizations would normally have five (5) or six (6) segments, with both the right and the left having the same quantities assigned. The middle right and left segments of the curve have almost the same quantities too. Hence, the actual perfect or nurmal curve would have the following quantities: 5-10-35-35-10-5

Many organizations like GE, Toyota, etc. would normally reward the top 5% and 10 % on the right side of the curve. Those 5% on the left side of the curve is usually "managed-out" when they fail to improve their performance after another or two (2) more appraisals--- depending on internal policy and labor law.

I also disagree with Siva's point that the ratings will just have to be inserted into the curve and it will find its place there. This view is not correct.

The reason why this method is called "forced ranking" is because all concerned employees evaluated are compared with each other and ranked to determine the best among the group. Hence, when a group is composed of 100 employees, these employees will be ranked from 100 to 1 and distributed according to the above percentage I mentioned above.

We must all understand that the Bell Curve or Forced Ranking is not an appraisal or perfromance management tool.

An appraisal refers to the evaluation of performance (or outputs) vis-a-vis agreed targets or goals. What the Bell Curve can do is simply to identify the best performer among those who were rated with "Outstanding" via comparison and ranking. This is usually done to determine who deserves promotion/ rewards or sanction for every performance period.

Best wishes.

Ed Llarena, Jr.

Managing Partner

Emilla Consulting



(helps improve corporatte governance worldwide, esp in Asia, the Middle East, Africa, and the Pacific Region)