The ‘curvacious’ myth of the ‘bell’

Over the years, the famous bell-shaped curve has caused a lot of agony to a lot of people, but its time managers realized it was all a myth that the performance assumptions were being based on.

Research has suggested that the famous statistical model of the bell-shaped curve, though easy to understand, is not an accurate representation or reflection of how the people behave. As a result, all over the years, the HR departments and managers and business leaders have been creating a lot of agony & frustration for so many employees (and even students who are graded by the curve).

Recently, Microsoft disbanded its entire performance management process when it realized that for decades it had been encouraging its top performers to leave by blindly following the bell-shaped curve.

A bell-shaped curve represents a normal distribution. The model assumes that there will be an equivalent number of people above and below the curve and that there will be a very small number of people two standard deviations above and below the mean of the curve. The curve implies that there will be a very small number of high performers and low performers while the bulk of the people would be cluttered in the middle. To avoid ‘grade-inflation’ managers force the performances to be distributed on this curve as well.

This causes the high performances ratings to be rationed and create a breed of losers, who actually not are, but relatively turn out to be so in order to be fitted in the curve. Moreover, the maximum amount of money and rewards get spent in the middle slab, which actually as per the curve is the band of average people. Shouldn't the company spend more to reward its top-performers?

Research says that people’s performance actually fall in a power-law distribution, which is a long-tail distribution. In this distribution, there are a small number of hyper-performers, a broad swath of good performers and small number of low performers. It accounts for a much wider variation in performance that is a lot more real. In this curve, majority of the people fall before the mean with only 10-15% of the people being above it. This renders the concept of averages irrelevant. Reality says that the hyper-performers accommodate for a very high percentage of the total business value. It is these hyper-performers that any company would want to attract, retain, empower and reward. These are people who start companies, make new ventures work, develop new products, create excellent initiatives, and set examples for the rest. They are gifted for their skills, passion, drive and energy and they drive orders of magnitudes and values greater than those of their peers.

The good thing about the power law distribution is that it creates various level of low performers and doesn’t brand everyone as average. There are near-low-performers, there are good performers and the levels go all the way up to low performers. Companies who adopt the power law distribution for mapping performances focus heavily on collaboration, professional development, coaching and empowering people to do great things.

Nobody really wants to be rated on a five point scale, because performance is a continuous process and needs to be judged continuously as well. Since bell shaped curves create a quota on high performers, it incentivises a lot of top performers to leave, because they were a little short of being best, but they were still excellent and nobody paid heed to that. Moreover, the large bracket of people who fall in the middle bracket have no incentive to improve, since even if they improve to some extent, they will continue to remain in the big wide middle bracket and be ranked the same. In the end, the company ends up spending a fortune rewarding the average performers, at the expense of demotivating and frustrating the top performers, who should actually be rewarded for their gifted spirits and their superior performance.

Organizations need to re-consider their management and performance philosophies. One could get inspired from sports teams across the world. They hire and build super stars every single day. And they pay them richly. If you can build that kind of a performance management process in your team you’ll see amazing results. Forced ranking is a limiting concept, while continuous development is the model for success – for the organization as well as the employees. Everybody can be a hyper performer if the conditions are right.