Understanding Performance Appraisal Methods: Which One Fits Your Needs Best?

I want to know about this performance appraisal method.

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I can help you understand more about performance appraisal methods. Performance appraisal is a systematic process that evaluates an individual's performance in a job. It involves setting clear performance expectations, assessing progress, providing feedback, and identifying areas for improvement. There are various methods of performance appraisal, such as 360-degree feedback, management by objectives, peer reviews, and self-assessments. Each method has its own advantages and limitations, and organizations may choose the most suitable method based on their needs and goals. Let me know if you would like more information on a specific method or if you have any other questions related to performance appraisal.

Hi Siva,

Already, there is a post on this subject, and I have given my reply. I am reproducing the same:

Forced ranking is a procedure that requires managers to assign employees into predetermined groups according to their performance, potential, and promotability. The best-known company following this procedure is General Electric. They sort the employees into three groups: a top 20% on whom rewards, promotions, and stock options are showered; a high-performing middle 70% with good futures; and a bottom 10%. The bottom 10% is unlikely to stay.

Some other companies that implement forced ranking are Microsoft, Cisco Systems, HP, EDS, PepsiCo, and Sun Microsystems. What all these systems have in common is the requirement of comparison of people in addition to conventional performance appraisal. Managers must place each person into one of a limited number of categories with a fixed percentage assigned to each one.

In India, the pioneers to introduce forced ranking were the Murugappa Group in the late 1980s. If you understand this, your doubt on the Bell Curve will be answered. To make it clearer, after the performance appraisal, the numbers should fall in a bell curve: top 20% at one end, 70% in the middle, and the bottom 10% at the other end of the curve, making it look like a bell.

It is incorrect to say that any adjustments are made. In reality, no adjustments are made. A manager may rate all his employees in category A to please all. How do we correct this? The principle to correct this is derived from the concept of forced ranking based on the well-known statistical maxim, Uniform Distribution, or Normal Distribution.

I hope this makes some sense. I have been a part of the Murugappa Group, and that is where I learned this. I also tried to implement it in one or two companies, but not with much success. The failure was basically due to the very small numbers I was dealing with in different companies. This method works well when you have a large number of employees to be rated. In small numbers, say for 50 to 100 or even 200, this may not work perfectly as you may not get a perfect bell curve.

I hope this makes sense.

Siva

Go through this post, please.

Once the appraisals are done and ratings submitted in the system, the ratings go through a normalization process to ensure that overall ratings are in the form of a bell curve (e.g., on a rating scale of 1-5). The maximum number of employees should receive a rating of 3, with not more than 10% at ratings of 1 and 5.

For example, if an appraisee is rated at 4.8 and the system has already reached its limit for ratings of 5 with employees receiving 4.9 and 5.0 ratings, the appraisee's rating of 4.8 is adjusted to 4 to maintain the curve's shape. The ratings can only be viewed by the appraisee after the normalization process is completed.

I work with TCS, and this system has been successfully implemented in my organization.

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 reputation 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 across the entire employee database, 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, resulting 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 remaining 10% are the individuals who are considered worthless and can't be trained, hence are fired if their 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 the 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 the attachment for a better implementation of the tweaked Bell Curve appraisal system.

Thanks & Regards,

AJ

Hi AJ,

Thank you for sharing information on the Bell Curve Methodology. I tried following your guidelines for a test run, but I couldn't find the Data Analysis icon under Tools. Could you please provide me with further guidance on this?

Regards,
Rachna Sinha
# 040 23100600/601

I'm Robert Bacal, author of a number of performance management books published by McGraw-Hill. This is a topic of interest to me since I'm absolutely against the use of the bell curve. A number of companies, including Microsoft, have stopped using it, and there have been some successful lawsuits in the USA.

Here are some resources:
[Employee Ranking Systems Reference Library](http://performance-appraisals.org/appraisal-library/Employee_Ranking_Systems/)

Articles:
- [Does rank and yank improve productivity?](http://www.performance-appraisals.org/faq/yankfallacy2.htm)
- [About Employee Ratings and Employee Rankings](Here's more questions and answers on ranking, rating, etc.)

If anyone has questions, I'd be glad to answer them here.
Robert Bacal

Hi, I'm a newcomer, but I'm really interested in this blog. Can anyone share with me a force ranking policy? Do we have one? :)

Dear Sir,

I am highly satisfied with the above answer, but I have some confusion. As per the attached diagram, which one is the top performer at 20%, the middle performer at 70%, and the lower performer at 10%? Is it negative or positive?

I am requesting you to please explain to me as per the attached diagram as I am facing many confusions. I am waiting for your reply as I have to submit my project.

Thank you.