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Recently, the New Performance Management System has been introduced in Gov’t
Sectors across the country based on Key Performance Areas (KPA) which is having
its bearing on Management by Objective. In simple words for a public sector this
new appraisal system is quite pragmatic with less scope of biasness because of
cascading from Top to Bottom. The Memorandum of Understanding (MOU) is agreed
and signed by the Chief Executive with Gov’t of India covering all activities of
the organization with specific targets. The executives at the top level share
the MOU points pertaining to their respective disciplines. Following the
cascading approach, the MOU points are converted into KPA to be assigned to the
executives down below in the hierarchy. It is going to become mandatory for
every organization to have Bell Curve Approach identifying the potential at all
levels of Human Resource in the organization.
It has been observed that the people do not have the proper understanding about
the concept of Bell Curve Approach and confuse it with the Appraisal system,
whereas it is only a tool to be used for justifying the comparison of employees
within a group or within the entire organization and also on the face of
budgetary constraints. When I say it is not a appraisal system, I say so because
it does not have built in performance standards and metrics to distinguish
outstanding, very good, good, average or poor performance. As a matter of fact
Bell Curve rather needs another appraisal tool to facilitate the distribution of
employees within the percentages that the company mandated to be assigned within
the curve. Basically, the normal distribution curve used in a statistical
science is used for implementation of Bell Curve Approach, mainly as camouflage
to portray its validity and acceptance.
Let us to go back to the history about this theory which was conceived in the
year 1994 by Herneistein and Murray when they analysed the forced ranking
appraisal system to come out with the bell curve approach. According to them,
managers should rank their employees from best to worst by applying rankings in
a normal distribution curve with the basic objective to use that bell curve for
determining the pay, rewards as well as no rewards.
The Bell Curve facilitates the grouping or classification of employees for types
of rewards and other benefits to link pay with performance commonly known as
Performance Related Pay (PRP). In today’s world the organizations implementing
Bell Curve Approach are keeping the following standards for identifying the
percentage on performance level:
• Out Performers - 10%
• Above Expectations - 20%
• Meeting Expectations - 40%
• Below Expectations - 20%
• Unsatisfactory - 10%
The Bell Curve or Normal Distribution Curve is quite easy to use understand and
implement because following this concept we simply arrange the rated employees
from one getting the highest rating to one who got the lowest with forming the
groups with forming the groups by distributing them on percentage basis in
various allocated columns. The Bell Curve needs to be used independent to the
annual performance appraisal rating. The concept of Bell Curve is to be
implemented with due care ensuring that it should not influence and “LEAD to the
CHANGE” of the actual performance rating. The results of Bell Curve should be
utilized mainly for the purposes to guide the distribution of the total amount
of rewards, budgeted by the organization for a given year just to pay for
performance identified by comparison.
A question may arise here that when there were 100 employees out of which say 28
were ‘Outstanding’, then, according to the bell curve only 10 employees find
place in the top slot (right tapering end of the curve). i.e. outstanding
category; so what will happen to the other 18 (28-10) employees? The difference
between the outstanding and above expectation category is huge, but due to the
Normal distribution, outstanding employees are rated same with the ‘Very Good’
employees. Moreover, in such a situation which 10 persons are to be chosen, if
there is hardly any difference amongst them. So here creeps in biasness say
injustice to 18 persons. The most relevant question will arise as to what will
happen in a situation where all employees have been rated outstanding
performers?
We can find the answer to the above question in the Bell Curve, where the
employees are ranked from top to bottom. The system believes that even the best
performers can still be ranked. As such, if twenty (20) employees get an
OUTSTANDING (O) rating, then they can be ranked from 1 to 20, with the one
getting “rank number one” presupposed to be the best among the “O” performers.
If the organization policy sets a “10-80-10” normal distribution, then only the
top TEN will go to the right side or 10 percent column. The next TEN outstanding
performers will be “forced fit” to the middle the 80 percent, but actually it is
into two: 40 percent at middle right and another 40 percent to the middle left
side of the curve. If the organization policy says that those who go to the
right side gets promotion and an X percent of bonus or reward then only the TEN
employees will be promoted and get that X bonus. The 11th to 20th employees with
“O” rating will have the same fate as those who did not get an “O” (may be “Very
Good” or “Good” only). But definitely, the TEN poorest performers will go to the
left side of the curve. And if the organization policy is to manage them out,
then they will be dismissed. There will be chaos and problems within the
organization when those that got an “O” will soon discover that their ratings
were changed to “Very Good” or “Good” just because they “slide down” the curve
during the force fitting stage.
On the face of above limitations, the Bell Curve Approach does not recommend the
change in rating regardless of the outcome in the bell curve distribution. If an
employee is an outstanding performer, he will still be outstanding even if he
was the 20th among the “O” performers and was not given promotion or bonus.
The Bell Curve is having certain bottlenecks which need to be addressed and
taken care of for viable solution. These pitfalls or I may not be wrong to say
‘flaws’ can be categorized into three categories:
a) Normally, this Bell Curve Approach is implemented department wise instead of
having its applicability on the entire work force that gives the chance that
worst in some departments may be much better than the average in other
departments.
b) When this approach is implemented in the department where the performance
have been very good but the salary is quite less as compared to other
departments than sooner or later the organization may see that the top 20
percent employee may leave the because they may not feel happy with their
respective packages after comparing the same with the employees working in other
departments.
c) While following the Bell Curve Approach along with improving the top
performer in the organization it would also attract hyper competitive nature
among the employees which may result into dysfunctional working environment in
the same department. Moreover there is another drawback which can be seen
because generally, the employees sent for training who are coming below the
expectation level, thus ignoring the important aspect of training needs for
better performance.
There are great amount of benefits which may come by following the Bell Curve
Approach, if it is applied properly and aligned with good practices such as
talent management and competency development. There will be a very effective use
of this concept for the organizations which are going for restructuring,
re-engineering for new business processes by way of cutting down their work
force for the cost advantages etc., Some HR Professionals have a feeling of
apprehension about complication in deriving the Bell Curve since it is
statistical tool requiring accuracy and perfection. For these professionals
there is a good news that not they can use a software that can generate desired
output in the form of fool proof, error free, statistical analysis as well as a
results which can be put to test for effective use. There are number of software
available in the market such as K-Lite.
General Electric was the first company to implement this concept which was
followed by Microsoft, Sisco Systems, Hewlett – Packard and Sun Micro System
etc. In our country, the response was not so encouraging to adopt this system,
though it succeeded in the West because of work culture followed by corporate
policies. But since, we tend to have a more emotional approach, it never became
so popular. Care must be taken that using Bell Curve as appraisal tool should
also have the scope for answering the complaints and law suits. It is not really
possible to have any legal defense. A large number of HR practitioner in US and
Europe do not advocate for appraisal as a whole mainly because of Bell Curve.
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