The biggest myth of Bell Curve system of performance appraisal: Create super performers
The prevalent (pseudo)belief in even established businesses is that they can filter out the bad performers from the system and keep squeezing up to get the creamy layer of super performers at the top who can do wonders. This false belief gave birth to one of the biggest flaws of appraisal systems of the modern world “The Bell Curve”.
It actually means grading by curve. This is akin to the grading of my 1st standard kid on the scale of 1-5; but the corporate doesn’t work in that ultra-simpler manner.
Numerous research shows that this statistical method doesn’t work in the way people perform. By Bell Curve, the HR people and managers create problems for the employees which hurts the organizations in the long run.
Recently I was talking to a senior official from Microsoft who portrays the plight of employees before Microsoft took decision to abolish the bell curve appraisal system in October 2013. “Majority of the employees were feeling like a crap in the system. There was no motivation for average performers, poor performers were being chucked out and super performers were excited to see still better opportunities outside”, he retorted.
The recent addition is Tata Consultancy Services (TCS) who abandoned bell curve appraisal system after realizing its dormant pitfalls. Earlier, IBM and Accenture also threw bell curve out of their system.
What is Bell Curve System of Appraisal?
This is the statistical method which forced the employees to be distributed into the grades, “top performers”, “average performers”, and “poor performers”. This rates an employee not on absolute the basis of what he does but on the basis of what others do.
It aims to:
- Reward top performing employees to motivate them to attain business goals.
- Encourage the average performers to shift to the grading of top performers.
- Identify the poor performers to give them room for improvement or chuck them out of the system.
The basic fundamental is to keep pushing the people to higher grades and filtering out individuals from lowest grades…. this is paradoxical!!! Does that work? I think it doesn’t.
How bell curve doesn’t create super performers?
As Matthew Syed wrote in his book “Black Box Thinking”, cognitive dissonance is the state where we spin the evidence to fit our beliefs rather than adapting our beliefs to fit the evidence. The HR heads of most of the companies who adopted the bell curve are in the state of cognitive dissonance. It’s difficult for them to accept the evidence. They and numerous other intellectuals keep on presenting the hollow arguments in the favor of their decision to adopt bell curve.
Here are some reasons that Bell Curve doesn’t create super performers and doesn’t work:
1.No one wants to be graded on the scale of 5:
The bell curve of appraisal is highly subjective. The performance of an employee remains a number, a grade which is more of a relative result of others in the group. It makes people defensive and doesn’t encourage best behavior to come out.
2.Super performers are inclined to leave:
Since the people getting grade 1 are merely 4-5%, many super performers are stuck up in the grading of 3 or 4. They are more inclined to switch organizations. Their thought process likely to be, “I will not be able to reach where I deserve to be, let me go somewhere else and move ahead”.
3.Team work and collaborations reduces:
Many research works have proven that the collaborations within the individuals reduce drastically in the organizations following bell curve appraisal system. Individuals selfishly want to move to the elite 4-5%; hence reduce collaborating with colleagues. They strive to emerge as individual heroes.
4. Demotivated average performers:
Many mid-level performers may remain in the middle of the curve for years together. They know that the top slot is limited for some; hence they remain complacent with mid performance rating which at least saves their job.
Ironically, the mid-level is crammed up with the individuals who are either A class performers pushed into the middle slot; or average performers who are happy with the status quo. Both the conditions are not goo for the organizations.
5. Imbalanced distribution of rewards compensation:
Most of the rewards and compensation are distributed among the large group of mid-level individuals in the bell curve. The compensation difference between the mid level and super performers are illogical, looking into the fact that this is forced ranking system where even the group of top performers are also divided into the poor, average, and best performers.
Many companies realize mistake after some time when they see that the compensation has become highly skewed in favor of few select individuals who are marginalized by bigger lot of people graded under middle performers.
Time to reinvent the Performance appraisal system:
Originally the bell curve was meant for large organizations, the bell curve was advised to be ideal for the group of more than 150-200 people. Ironically, I’ve seen the HR managers implementing the bell curve on the groups as small as 5 or 10 individuals. I feel pity on such managers and more so on the employees who bear the brunt of this illogical appraisal system.
I cannot suggest any system which is perfect for performance appraisals, but it’s you who has to see through your objectives. Deploy a system which rewards individual performance and team collaboration; the system which doesn’t alienate the individuals based on their performance but provide them chance to be a star performer.
Let the debate continues and you’ll see more and more companies abandoning the system as HR managers forced to see the cognitive dissonance and accept their mistakes.