Understanding the Bell Curve Model in Performance Management: How Do You Set Rating Cutoffs?

Hey all,

Could anybody explain how the Bell Curve Model of Performance Management works? If it is followed in any of your organizations, please let me know how to implement it. Just wanted to know how to set the cut off for the different ratings.

Please let me know where I could find some material on this.

Thanks and regards,
Aanchal

Hi Anchal,

I agree with you that the system is full of biases. I am working in a telecom company, and PMS is my core area, but every time I do this force-fitting, I feel really guilty.

Hi!

We had a discussion on bell curve method in Performance Management, but it was related to salary distribution. Please check this link; hope you would find some info that helps you out:

<link no longer exists - removed>

I have worked in BPO, where this method was applied in PA. They did the following activities:

1. They divided the entire workforce into the following percentages:
a) 5-8% with rating 5 [Top rankers - Excellent, Exceed expectation.]
b) 12-15% with rating 4 [Next level rank - Good]
c) 70% with rating 3 [Satisfactory performance - Achieved expectation]
d) 10-12% with rating 2 [Needs improvement, have the potential to do better]
e) 5-8% with rating 1 [Poor performance, continuously missing targets, to be put in PIP]

2. Then they divided the process according to their sensitivity to the client into ranks. For example, if there is a process with assigning of cheques, even if the process is not a voice-based one, it was given the highest ranking. It was decided so because a mistake of putting one extra zero in a cheque can create a big loss to the organization.

3. After the performance appraisal ranking was done by each individual process, they redivided the budget of every process into the ranks allocated to each process. For example, the process assigning cheques would have the highest budget, followed by the next process.

4. Thus, they divided the budget among the individual team members in each process according to their individual rank. For example, if the budget allocated to a process is 50 lacs, then the top ranker with a rating of 5 will get a hike of nearly 35-40 thousand. Again, the budget for different ranks depended on the number of team members in the process.

I hope I have answered your question. If not, please let me know. I will surely try!

Regards,

(Cite Contribution)

Hi,

Yes, I agree with (Cite Contribution) that this is the way it works. The market standards for ratings are as follows:

- For "A" rating, there is an increment of 20%.
- For "B" rating, it is 15%.
- For "C" rating, it is 10%.
- For "D" rating, a Performance Improvement Plan, which is a form of a warning letter, will be given to the employees.

These ratings will be determined by the supervisor during discussions with the subordinates. Additionally, the company will establish limits on the distribution of ratings as follows:

- A rating - only 7%
- B rating - only 25%
- C rating - only 63%
- D rating - only 5%

For example, out of 1000 employees, only 70 can be in the A rating. If there are more, they will be fit into another rating based on the company's increment policy.

Regards,
Sakthivel

Although our company has a workforce of around 900 employees, to date, we do not have any basic criteria for salary increments. Could you please assist me in establishing the same?

Hi Sakthivel,

In fact, yesterday we were discussing this method of performance management, and I was asked by my Director to collect more information on this topic. I just logged in and found this informative message from you. Thanks a lot. It is really helpful.

Thanks & regards,
Savithri