Understanding Bell Curve Appraisal System and Forced Ranking in Performance Management

Dear friends,

Can you shed some light on this bell curve appraisal system?

Regards,
Jane

Basically, to my knowledge, it is not as we rate:
- Excellent 25%
- Above average 20%
- Average 15%
- Below average 10%
- Poor 0%

Rather, it is like this, i.e.:
- Excellent 10%
- Above average 20%
- Average 25%
- Below average 10%
- Poor 0%

On behalf of performance ratings, we give these percentage increments.

I think the bell curve appraisal system is better known as the Forced ranking appraisal system. It requires managers to rank their employees from best to worst, apply the rankings to a bell curve, and use the results to determine pay as well as who to fire.

"General Electric, the firm with which the procedure is most closely associated, sorts employees into three groups: a top 20 percent on whom rewards, promotions, and stock options are showered; a "high-performing middle" 70 percent with good futures; and a bottom 10 percent. "A company that bets its future on its people," CEO Jack Welch wrote in his final stockholders' letter, "must remove that lower 10 percent and keep removing it every year - always raising the bar of performance and increasing the quality of its leadership."

GE isn't alone: Ranking employees is an everyday practice at companies like Microsoft, Cisco Systems, Hewlett-Packard, and Sun Microsystems. Sun's system parallels that of GE: 20 percent are "superior," 70 percent are "Sun Standard," and 10 percent are "underperforming." Hewlett-Packard uses a 1-5 scale, with 15 percent receiving the best grade of 5 and 5 percent receiving 1's. Microsoft uses a scale; EDS uses quintiling. Fortune estimates that a quarter of Fortune 500 companies have instituted forced-ranking programs.

This excerpt is taken from the 2nd article below.

Hope the following articles help in understanding the bell curve appraisal system:

1) (the best one)

http://ntcassoc.org <link updated to site home>

2)

http://www.conference-board.org/arti...cle.cfm?id=146

3)

http://www.coolavenues.com/know/hr/amit_bell_1.php3

Actually, I know what the forced appraisal method is like. There are two extremes, good and bad. The manager has to rank his employees accordingly. For example, an honest employee will be ranked in the top 10%, and likewise. But frankly speaking, I don't know how it is implemented. Can someone please shed some light on that? Thank you in advance.

Regards,
Deesha Chandan

Hi,

Personally, I am completely against the implementation of the Bell Curve appraisal system in India. It had considerable success in the West because of the work culture followed by corporates there. In India, we tend to have a more emotional approach, and hence, such an implementation could seriously hamper the name of the company in the candidate and graduate market.

Three major flaws I see in this system are:

a) This system is implemented department-wise instead of the entire employee database, and hence, there are chances that the worst in some departments are much better than the average in other departments but still, they are forced to leave.

b) When this system is implemented in a department where the performance has been very good and the company can't afford to fire the lower 10%, the bonuses and the raise in salary are quite less compared to other departments, and hence, sooner or later, the firm sees the top 20% leave because they are not happy with their respective packages.

c) This system, along with improving the top performers in your company, would also attract hyper-competitive nature among employees and hence result in a dysfunctional working environment in the same department.

d) The trainees are generally the ones who get fired.

Now for the implementation:

It's generally based on three levels of performances: the top 20% is extraordinary, the mid 70% is ordinary but the backbone of the company, and the rest 10% are the guys who are worthless and can't be trained, and hence are fired if the performance doesn't improve for three consecutive years.

The appraisal system is done department-wise, and the respective line managers are supposed to rate employees into these three groups.

The candidate who is not able to come out of the lower 10% for two/three years is then fired.

I hope the above clears all doubts on drawbacks and implementation of the Bell Curve appraisal system.

I will have to agree that the Bell Curve, with a few tweaks, can be very fruitful. Please check out this post for a better implementation of a tweaked Bell Curve appraisal system.

Thanks & Regards,

AJ

(Note: The provided URL should be hyperlinked for accessibility, but as plain text, it appears as "https://www.citehr.com/96800-bell-cu...tml#post368972")

Hi!

The Bell Curve and Forced Ranking are NOT appraisal systems. Anyone who says otherwise is either out of their mind or does NOT understand what an appraisal means.

The Bell Curve is only a tool used by companies to justify their comparison of employees within a group (or even within the entire company) and their budgetary constraints. It is NOT an appraisal tool because it does not have built-in performance standards and metrics to distinguish Outstanding, Good, Average, or Poor performance.

The Bell Curve relies on or needs another separate appraisal tool to facilitate the distribution of employees within the percentages that the company mandated to be assigned within the curve. It uses the Normal Distribution Curve (NDC) of Statistical Science as a camouflage to portray its validity and acceptance. But you should notice that whereas the NDC assumes 100% of the population sample distributed equitably within the curve, the Bell Curve has popularized a distribution concept of 20-70-10, which is obviously not a normal but a skewed curve. The percentage distribution is then used as the basis of who among the employees in a company deserves to be given rewards/increases (10%) and/or sanctions/managed out (20%).

Forced Ranking is also not an appraisal tool because it does not have its built-in performance standards and metrics just like the Bell Curve.

Forced Ranking is a "conceptual methodology" based on the notion that employees in a company (regardless of their quantities) can be ranked from the first (best) to the least (worst).

But for rational and intelligent minds, before one can accept a valid ranking of 1-100 (or from the best to the worst) employee, the basic question must be answered: INDEED, ON WHAT BASIS? Performance? Seniority? Ability? Competence? Education? etc.

Forced Ranking, just like the Bell Curve, also needs a separate appraisal tool to be able to make a credible ranking of employees, whether within groups or within the entire company.

The worldwide perversion of these two (2) concepts and tools has reached a certain height that indeed a close scrutiny has become imperative. Otherwise, many organizations and HR practitioners will be deceived into believing that these two are superior and effective performance appraisal tools.

When a company uses these two (2) tools as their company's appraisal tools, then the company must be prepared to answer complaints and lawsuits because these tools, despite their international popularity, are not legally defensible. This is also the reason why many HR practitioners in the US and Europe hate appraisals as a whole&mdash;indeed thanks to the Bell Curve!

Best wishes.

Ed Llarena, Jr.

Managing Partner

Emilla Consulting

/ 00632-787-0423

Hi,

You are absolutely right; the bell curve is a rating tool for performance appraisals. However, the main issue has always been rating employees, which is why it is referred to as the bell curve in the context of appraisals. Once the ratings are determined, the appraisal process becomes primarily administrative. Since the bell curve has become one of the most commonly used tools and an integral part of the appraisal system, it is generally associated with the appraisal process.

Thanks & Regards,
AJ

I have recently faced the agony of the Bell Curve Appraisal system. I achieved the assigned KPIs, and my immediate boss rated me exceptional. However, the HOD has ranked me lowest because I am not his favorite. When I asked him for an answer, he told me that I have done nothing and it is the HR that has rated you like this. This is disgusting. Kindly advise me on what I should do to avoid such things in the future.

Regards,
Dheeraj

A 'Bell Curve' is a statistical indicator of the distribution of appraisal scores of employees in an organization. Ideally speaking, each Head of Department/Function should have access to this curve in respect of employees of their department/function. The purpose is to normalize the scores at their own level. This normalization takes into account all the Managers who are lenient in rating their subordinates (meaning a rating of 8 to 9 out of 10 is given to all) and the Managers who are too harsh/conservative (meaning rating all employees in the range 4 to 6 points). Unless these rating tendencies are normalized, some good employees, placed under harsh managers, may be at a disadvantage compared to their counterparts reporting to lenient managers. Thus, normalization helps in removing subjectivity and can be done easily if Bell Curves are readily available.

In some organizations, each Manager is given online access to the Bell Curve for his/her own subordinates and is expected to rationalize the scores before forwarding the appraisal reports to the next higher level of reporting. This enables normalization at the origin.

The final normalization takes place at the company level when appraisals of all employees are received by HR. A 'Bell Curve' for the complete organization is seen and its statistical mean and deviation are determined. These parameters are correlated to those at the Functional/Departmental level, and the aberrations are addressed through a consultative approach. This requires a high level of maturity of an organization's HR processes since the outcome is eventually used for the grant of increments and/or performance-linked variable pay.

The entire process discussed above requires an automated HR environment. Effective tools such as 'EmpXtrack' are available in the market today to enable the 'Bell Curve' approach to performance evaluation becoming realistic.

Hi,

As seniors in the HR field, do you believe that the 'Bell Curve' method is the most effective tool to measure the performance of employees? This method can disappoint both the top 20% and the bottom 10% at times, especially when there is a marginal difference in the scores of the employees. This situation may lead to missing the top rank or falling into the bottom 10% bracket, despite the hard work put in throughout the year. Employees often feel disappointment and dissatisfaction in such cases.

Is there any other performance management system where all employees are motivated to perform better throughout the year?

Regards,
Nirmala