Is there an Alternative to the Bell Curve as part of the performance appraisal?

Dear All,

It's that time of the year when we in HR have to hand over increments and pink slips to performers and non-performers. I have been rather uncomfortable with the concept of branding employees as non-performers, as there are factors that affect employee performance over which the employee has no control. These factors are not considered when making decisions about increments or handing over pink slips. Therefore, I have been trying to find an alternative to the Bell Curve that does not categorize employees based on such issues.

My dear friends, I seek your opinions and valuable experiences on different approaches other than the Bell Curve that you have either followed or are aware of as part of the performance appraisal. Your views will be of great help to me and others who also feel the need for an alternative approach besides the Bell Curve.

Thank you.

Dear Anuradha,

In the course of my training programs, occasionally, my participants (who were Managers) complained about the limitations of the Bell Curve. They mentioned that in their team, if they had five "Very Good" employees but only four vacancies for "Very Good," the fifth employee had to be pushed down to "Good" per force. They expressed that this process was quite painful.

Against this backdrop, when I provide consulting services on Performance Management System (PMS), I advise my clients to rate employees on a scale of 100 and categorize them into various performance slabs. These slabs could range from > 85%, 76 to 85%, 66 to 75%, etc.

For example, if a company has 100 employees, the breakdown could be:
> 85%: 30
76 to 85%: 40
66 to 75%: 20
Below 65.9: 10

Salary increments can be given based on the performance slab. This method helps in eliminating the bottom-level employees and ensures that employees do not harbor disgruntlement for being rated in a lower performance slab.

For further details, feel free to contact me.

Thanks,
Dinesh Divekar
+91-9900155394

Dear Dinesh,

This is a good idea that you have mentioned. But at the end of the day, the slabs are another way of giving grades. I can do it also within the Bell curve by giving the topmost A+, A, B+, B, and C.

Do you have any idea if the 9-box can be incorporated into the bell curve in some way? That way, I feel the person, even though at a lower grade now, can be nurtured.

Regards, Anuradha

Dear Anuradha,

You have written that "But end of the day the slabs are another way of giving grades". Here, my views are different. The manager does not give any grade as such, but then the employee earns it. Secondly, as in "Bell Curve", there is no forced ranking as such.

You wanted to introduce "9 Box Matrix". However, it may be noted that this is again an individual-centric approach. The success of PMS depends on the organization-centric approach. I have a few examples where the PMS is made people-centric and how the organization paid for it. Whatever method you choose, the organization should not suffer because of it. Call me on my mobile, and I shall tell you a few instances of how PMS was self-defeating.

Thanks,
Dinesh Divekar
+91-9900155394

Dear Dinesh,

I have certain queries regarding your post. You suggested, "The manager does not give any grade as such, but the employee earns it." However, in a 180-degree approach, the final grades are given by the manager. Therefore, regardless of the employee's self-assessment, the achievement level at the end of the day, in most cases, is determined by the reporting manager, either with the employee's approval or discontent. Thus, from an employee's point of view, I can't see it any differently from a forced ranking unless the organization unquestionably accepts the employee's achievement level.

I am in a dilemma as to which approach is better: an employee-centric or organization-centric one, considering my company is a service-oriented company with an emphasis on individual contribution. I am also trying to understand how an organization-centric Performance Management System (PMS) will benefit an employee. It seems paradoxical when we aim for a fair PMS with a positive impact on employee performance without keeping it employee-centric.

I am curious to know if this kind of approach would be beneficial in a service-sector company or a manufacturing company. Your insights have raised some questions that I have presented here.

Thanks,
Anuradha

Dear Anuradha,

I recommend making PMS centric to the organization because I have seen cases wherein employees' backs were patted at the expense of the organization. Nothing is more paradoxical than this.

In my previous post, I have written that typing the whole thing is difficult. Therefore, you may give a call and seek clarification.

Thanks,

Dinesh Divekar
+91-9900155394

Hello,

It is not prudent to follow the percentages mentioned as follows:
- Above 85%: - 30
- 76 to 85%: - 40
- 66 to 75%: - 20
- Below 65.9: - 10

This approach will not drive performance and does not align with the fact that any organization will have a maximum of 30-35% great performers who typically propel the organization forward. Giving 70% of the people a rating of 4 or 5 will result in higher employee costs.

Even high-performance companies have a maximum of 50% top 2 level performers in the above category. Therefore, the "exceeding expectations" category should be capped at 15%, "sometimes exceeds expectations" at 20%, and "meeting expectations" at 45-50%.

Regards

Dear Mr. John P. Daniel,

It appears that you are going back to the "Bell Curve." In the bell curve or otherwise, we have to design the performance slabs. However, what I had written was not to do forced fitment in the slab. What I meant was to measure the actual score and leave it as it is. If you do this, then it gives us the actual picture of who stands where and how many persons fall into what performance slab.

Otherwise, paragraph-wise replies to your post are as below:
This approach will not drive performance and does not gel with the fact that any organization will have a maximum of 30-35% great performers, and they normally take the organization forward. If you give 70% of the people a 4 & 5 rating, that organization is going to have a higher employee cost.
Reply: - Along with the higher employee cost, it will reduce the cost of under-performance. Obviously, the latter is more compared with the former.

Even high-performance companies have a maximum of 50% top 2 level performers in the above category. So always exceeding expectation category can be a maximum of 15%, sometimes exceeds expectation can be 20%, and meeting expectation can be 45-50%.
Reply: - Why should we not have all the employees who do not have a score greater than 85%? Those who score anything less drag the performance of the organization. Companies like Google or Microsoft have remained competitive because they keep only the highest-performing employees. Let me give an example of one of the garment factories. In the factory, the tailors are categorized as 'A,' 'B,' and 'C' grade. When a new Factory Manager took over, she started removing 'C' class tailors and started substituting only with 'A' class tailors. Over a period of time, there were about 90% 'A' grade tailors and 10% 'B' grade tailors. With this configuration of the workforce, it reduced the Cost of Poor Quality (COPQ) significantly, and productivity of the factory increased.

Hope I have clarified my point now.

Thanks,
Dinesh Divekar
+91-9900155394

We are a company of around 25-30 people, comprising two major fields: Operations and IT field. Kindly advise on how to implement a Bell Curve appraisal system and what other alternatives exist. I would appreciate your candid views.

Hello All,

This is my opinion, and others' views are most welcome:

1. Bell Curve - Forced Distribution is a must, as how will you differentiate a poor vs. excellent performer? In my opinion, the bell curve is useful when the cost factor comes into play, and people must understand the differentiation is necessary; otherwise, a poor performer will remain poor and will not improve. In case a poor performer is not improving, he needs to move out of the system, very clear and simple.

2. 9 Box Matrix - Is primarily for succession planning/talent management and can be used for appraisal, but it has its limitations, like how do we rate the potential of an employee.

3. Long Tail Method - This is more beneficial and less harsh on the employee or HR, as it says that 80% of the organization's achievement is due to 20% of employees. Vital few and Trivial Many. The long-tail method says that employees are Hyper Performers (20%), Good Performers (70%), and Non-Hyper Performers (10%). As an HR professional, we have to identify the Hyper & Good Performers and develop them, as some employees are gifted Hyper Performers and some, with the help of coaching, training, and mentoring, can be developed from Good to Hyper Performer.

For all the above, the following are a must:
1. SMART Goals - Linked to BSC or FAST Goals - Frequently Discussed, Ambitious, Specific & Transparent.
2. Robust Appraisal System - Half-Yearly Review, etc.
3. Buy-in from Top Management and HoD.

Regards,
Indrajeet Sengupta
9921949745