24, Are bell curve and forced rating the best methods to manage employee performance and grow an organization

The newsletter on Human Resource expert opinion, for the Indian context

Bell Curve and Forced Ratings have been discussed for a very long time, and at least for the foreseeable five to ten years, we see that the discussion will continue.

So we are going to talk a little bit about whether a Bell Curve and Force Rating is really adding value to the organization, or they have outlived their utility.

Let's start by talking about the necessity of performance differentiation.

We are of the view that differentiating rewards, differentiating punishments, differentiating treatment to employees on the basis of performance is a relatively acceptable aspect, both to the employer and the employee. This is something that everybody expects. Not only people who are high-performing, but people who are average and underperforming.

They understand that as a result of performance, differentiation would be done. And that, we believe is one of the key components of the corporate life or the corporate culture in today's scenario. That is therefore one of the foundational principles on which organizations run.

So, a bell curve or a forced rating at the thought of it, is trying to only differentiate performance. The concept it is trying to do is only differentiate. However, the forced rating is also trying to work on another concept, which is called as a utopian silo.

Which means that we are going to have buckets of people who are supposed to perform at particular levels. And in that bucket, we are going to compare each other's performance. The reason we use a utopian silo is that we are creating an idealistic world, which may be very, very separate than the reality outside of the organization or in the industry.

People who are at a particular level of performance as a result of forced ratings or bell curves, may be pushed down into something which they are not really supposed to be getting. That's also linked to the rewards or the punishments or the treatment that we give to employees as a result of these forced ratings.

Now, a key aspect of any bell curve or forced ratings is that on the tail end, you normally are not giving average or above average treatment to employees, you're giving punishment or negative treatment, which means that people in the middle are getting average treatment or maybe little average plus treatment.

And people on the positive side or the head side will be getting a greater degree of positive rewards.

And on the tail side, get punishments or negative treatment, which is why we say that maybe as a result of forced ratings and bell curves, the environmental correlation is missing, and there is no understanding of what is happening in the environment and what is happening within our organization.

As a result of which, highly talented individuals or individuals who demonstrate ability to live up to the organization's objectives may be getting demotivated and may be shunted out of the organization. While some organizations may find this an acceptable thing, but hardly are there any organizations in today's day and age where a knowledge worker is required, who can now support the bell curve or the forced rating concept.

Because knowledge workers are not working in silos, they are working in a comparative environment. Comparative environment means that, (silo working environment means), I want this kind of performance, should you not be giving, I'm willing to let you go or willing for you to get punishment.

A knowledge worker in today's environment, if is not given a due respect in terms of rewards, they will get greater benefits both in terms of knowledge growth and treatment in any other organization outside.

So what is it that we are therefore recommending?

We are definitely not recommending that an organization should take a knee jerk reaction and close the bell curve or the forced rating concept. What we are recommending is the core of the bell curve or the forced rating concept is differentiating people on performance, which means a strong performance management system which can build on the relevant measurement of people, which can build on standardizing the ways of measuring people.

And if a silo needs to be created, we can build a silo, which is an organization rather than internal departments and internal sub-departments. And it differentiates performance rather than punishing for performance or not meeting the required levels.

Forced rating and underperformance should be differentiated. A bell curve is seen as trying to identify underperformers. A forced rating is seen as trying to identify underperformers.

What we recommend is a strong performance management system which can differentiate people and not focus on identifying underperformers, but focus on differentiating people who are doing great level of performance, who are doing standard level of performance, and who are trying to catch up on performance.

If that system can be done, if the measurement systems are strong, then it is perfectly fine for any organization to create whatever kind of grouping of people who are doing greater level of performance, standard level of performance, and below standard level of performance, and then build systems of treating employees on those.

And that system of treatment may come out to be called as a bell curve, or may come out to be called with any other name, which as a matter of fact, a lot of organizations in today's day are doing. The system of classifying people into different groups, treating them differently, has been built by numerous performance management systems, and is being measured in numerous performance management systems in many organizations.

So we recommend differentiating performance based on what individuals are doing, and on a strong performance management system, which is numerically driven or transparently driven.

A strong performance management system can be easily identified by not having a manager or a supervisor having to explain to the individual what is going good and what is not going good. A strong performance management system is that system which, like a dashboard of a car, can be seen by the driver themselves to figure out what is happening.

Therefore, a strong performance management system can itself tell an employee whether I am on the higher side, average side or below average side of the system.

India HR Guide is aimed at discussing and shedding light on aspects in a crisp manner that organisations in India follow in the area of Human Resources. It is aimed at CEO's, MD's and line managers to understand how various aspects of Human Resources can help shape their organisations journey in India. Our industry leading expert, Mandeep Singh, offers years of accumulated knowledge from having advised clients across sectors, and spread across the remotest corner of the country. Let's make the workplace, a better place.

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