360 appraisals, accountability, ‘average’ work force, benefits, bottom performers, cost of recruitment soars, distribution curve, Fauzia Kerai Khan, Flaws, Jack Welch, middle performers, motivates, pay-for-performance system, percentiles, performance appraisal, Productivity, pros and cons, statistical compulsions, The Bell Curve Method, top performers
The Bell Curve method of performance appraisal, used by many corporations, is a ranking system that rates the entire workforce by comparing the performance of those engaged in similar activities and grading them on the basis of their performance, and rewards or penalises them accordingly.
Highly endorsed by business leaders like Jack Welch, the method is a pay-for-performance system that rewards a small percentage of top performers, encourages a large majority in the middle to improve, and lays off the bottom performers. The percentiles vary according to the company’s policy, and are usually divided in the following manner: top performers: 10%, middle: 80%, and bottom: 10%.
Although it is very popular the method does have its share of benefits and flaws. These include:
- Motivates high performers to keep improving themselves with the incentive of bonuses, pay raises etc.
- Provides the majority of the workers (who are classified as average performers) with opportunities to improve themselves, increasing the company’s competence level as a whole.
- Slowly weeds out low performers, thereby improving the productivity of the organisation
- Enforces accountability across the organisation.
- Has high chances of giving out false reports as people may be placed in a certain category due to statistical compulsions or in order to normalise the distribution curve, rather than their performance.
- The aim of the Bell Curve is to push everyone into the top performer category but this does not serve the organisation positively as in reality, organisations are run on the combined efforts of the so-called ‘average’ work force. In other words, it is the average worker who contributes to the day to day running of the organisation.
- Since the bottom performers are replaced on account of their unsatisfactory performance by fresh talent, the cost of recruitment soars and the high attrition rates negatively impact the morale.
Having said this, the Bell Curve method can work really well if it is backed by other performance appraisal methods such as 360 appraisals.
– Fauzia Kerai Khan
The writer is Chief Consultant, i&b Consulting, Training, e-Learning. firstname.lastname@example.org.
First published in the Careers Section of The DAWN National Weekend Advertiser on September 1, 2013.