For MBA-HR aspirants – what is bell curve-based performance appraisal system

16 Nov 2016

For MBA-HR aspirants – what is bell curve-based performance appraisal system

If you ask any senior HR practitioners and employees who are into performance appraisal practices about the worst workplace practices, and we are sure the bell curve-based performance appraisal system will rank at the top.

Now what is this exactly. The bell curve-based performance appraisal is nothing but enforced rankings which compare employees’ performance relative to others and entails that managers have to plot team members along a distribution curve. The bell curve is actually a graphical representation of the fact that everyone’s performance is not the same. Some employees will be exceptional, some will be average, and others will be at the bottom. In the Indian context, it destroys the loyalty factor and leads to very high levels of attrition. This silly practice creates too much emotional stress.

Now times have changed and accordingly old practices should also be changed. People feel that forcing employees into ranks is an obsolete idea. The better solution to this is “A target-achievement based model”, and even the human resource managers who are graduates from the top B-schools also don’t agree any more with the policy of force-fitting that numerous companies still practice.

However, the people who support this practice say companies cannot have an total rating for employees if the market itself is a relative performance system,. The other argument advocated by them is that till people invent a better system acceptable to all, the normative curve system is the best as it is more predictable and creates a balance of fairness between employees and shareholders. if we have to assess human performance and link it to rewards and incentives, then not necessarily we will have a system where a majority of people will be happy and are at content. There will be attrition again, and lot of confusions.

But with the change of scenario and little bit of research there are companies who have laid benchmarks like over the past few years, Google and Microsoft have totally given up the bell-curve system. But here in India we still got lot of companies who religiously follow this system and are in no mood to change.

Sometimes employees do not have a problem with the bell curve appraisal system, but infact, with the lack of transparency that Hr policies have or whole understanding of the process. The bell curve is a well-accepted form of performance appraisal and this has been upgraded, modified and improved over the period of time.

The numbers game

especially in services-driven sectors it is the most viable option as such sectors have large workforces It doesn’t matter whether or not the bell curve is the most appropriate representation of employee performance. This is the only way appraisal can be made if the strength is too large.

For example In the IT-enabled services industry, the supply of employees is much higher than demand, and it becomes difficult to differentiate between individuals and thus the major focus of appraisals is this ranking system. For such sectors this is a system designed to clearly demarcate a section of relatively low performers. They form this as the basis for trimming.

There are multiple views when it comes to trimming. Some believe better hiring and training practices can help to keep this need for sacking at a minimum. Importance is to train them and retain them and if industry is paying them good then you should also revise the payment and appraisal structure.

Closing the bell

In India and abroad despite the voices in favor of the bell curve appraisal system, there is a rising trend of corporate looking for alternative methods.

What can be the Alternatives?

Digital revolution will soon make performance data more widely available so it’s a great idea to provide team access to performance data. Access to performance data can notify leadership at all levels be it top or lower and encourage team achievement in total along with speed; especially replacing old practices that are very slow and interfere with performance. Another alternative can be when management DROP the old thinking about individualized ranking and ratings and concentrate on trainings. This will automatically uplift the standards. Another option can be if the human resource managers emphasize on the high value of conversation and human relationships.