Use of Bell Curve in Performance Appraisals – Good or Bad? - Empxtrack

Before you’re stuck in the science behind the Bell Curve performance appraisal, do you really think it is fair to categorize your employees in different boxes designated as ‘top performers’, ‘average performers’ and ‘low-performers’! May or may not.

Well, we can help you make a perfect decision on this! Read on.

Organizations believing in pay for performance exhilarate the concept of performance appraisal on the basis of outcomes observed over a specific time period. It helps to:

  1. reward top performing employees to boost their confidence and motivate them to achieve business goals
  2. encourage mediocre performers to work harder and get into the square of highest performance
  3. identify low performers to guide them right and get them back on the track of better performance

If this is all that you wish to do, Bell Curve is the right thing on your mind.

Now think for a moment! How cool does it sound when HR people embrace a trigonometric plot (Bell Curve) calling it to be their strategic distribution of evaluating employee performance?

Believe it or not! People in past have used Bell Curve for carrying out performance appraisal process brilliantly. To an extent, it is all about enforcing the accountability on the employees and expecting them to do better and better. The normal distribution of this systematic bell-shaped graph places the majority of people in the average performance area while keeping the exceptions on both sides of the dropping slope.

A lot of debating has happened over the forced ranking system of appraisal. It is now very clear in the minds of HR managers that ‘though bell curve for performance appraisal is the right tool to understand and implement evaluations, yet it is not an ideal outlook for people to think, expect and perform’.

Forced rating assumes that all the employees in a company can be ranked as follows:

  • Top performers – 20%
  • Average performers – 70%
  • Non-performers – 10%.

Some HR professionals believe that a bell curve is the best way to identify the top performers and under-performers, whereas others believe it compels the appraiser to use a forced rating instead of a fair one. However, the truth lies somewhere in between. Let us explore some advantages and disadvantages of using a bell curve for performance appraisal from the organizational perspective.

Advantages of the Bell Curve System

Identify Top Performers through the Bell Curve Grading

The forced ranking compels managers to make decisions and differentiate between the performances of different employees. Those who are identified as high performers are rewarded; they feel motivated and work harder to grow in the company. Their growth and career plans can be developed suitably and initiatives taken to retain them within the company. This not only helps retain the top talent but also builds succession pipelines.

Manage Lenient and Strict Ratings of Managers

The bell curve is perhaps the only method that can be used by the organization to manage leniency and strictness of managers’ ratings. Lenient ratings mean a larger cluster of employees in a high-rating group (a right-skewed bell-curve), and strict ratings mean large numbers of employees in a low-rating group (a left-skewed bell curve). These unbalanced ratings may demotivate high performers and retain mediocre employees. The average manager has a tendency to rate on a lenient scale.

Identify Suitability of Employees in a Job Position

An underperforming employee may be more suited for another position in the company. The forced ranking with adequate analysis and HR intervention can identify other positions for employees. By digging deeper into the competencies, strengths and career plans of employees and placing them in positions which map better to their capabilities, HR can play a key role in employee development.

Manage Training Needs

The training management talks about the importance of the correct allocation of training to employees. The bell curve can help identify the training that is most applicable to different categories of employees.

Disadvantages of the Bell Curve

Too Rigid

Using the bell curve model may be considered a rigid approach for rating employees. Sometimes managers need to put employees in specific gradients just for the sake of bell curve requirements. This happens more often when the manager’s teams are small.

Loss of Morale

The bell curve performance appraisal creates doubts in the mind of both managers and employees, who may worry about the possibility of an exit during tough job market conditions. This may lead to a loss of morale and further deterioration of job performance.

Not Suitable for Small Companies

The bell curve is not suitable for small companies where the number of employees is less than 300. With fewer employees, the categorization cannot be done properly, and the results are mostly erroneous.

While there is an ongoing debate on the bell curve based normalization methodology, an additional 360 feedback may help ease some of these doubts. Employees’ desired and actual performance can be viewed through a bell curve in Empxtrack’s Appraisal dashboards. The bell curve for performance appraisal can be normalized or used to view the performance gaps of employees.