Disadvantages of the bell curve in performance appraisal

It compels the appraiser to use a forced rating instead of a fair one This system is implemented department wise instead of the entire employee database and hence there

are chances that the worst in some departments are much better than the average in other departments but still they are forced to rate below

With fewer employees, the categorization cannot be done properly, and the results are mostly erroneous.

Too Rigid: Using the bell curve model for performance appraisal 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.

The Bell curve model might turn out to be too rigid in cases where the employee strength in the organization is less. Here the manager might be forced to put employees in specific ratings just for the sake of bell curve requirements.

Managers are compelled to discriminate between employees according to these fixed percentages irrespective of actual performance. Thus, the charge of inequity can be laid against the use of forced distribution and the ‘Bell curve’.

Managers are compelled to discriminate between employees according to these fixed percentages irrespective of actual performance

It is dependent on supervisors who judge the capability and contribution of employee. The supervisor has to keep day to day physical record of day to day favorable and unfavorable tasks performed by the employee, but as it is a time consuming task many supervisors do it just before submitting the appraisal sheet to HR leaving ample room for errors and omission. This system is also open to bias and prejudice of the supervisors.

Examples of Companies who switched from BELL Curve & Reasons why they switched

After a clutch of global giants, including Microsoft and Adobe, decided to kiss the bell curve goodbye over the past year, back home Infosys, the country's second largest technology services company, too is rethinking this statistical model as a tool to rate its 150,000-plus employees. Microsoft abandoned the practice in 2013. Adobe, Juniper and Kelly Services did it even before that.

Says Srikantan Moorthy, senior vice-president, group HR, Infosys: "Performance rating will evolve in the next 1-2 years. What it will transform into is difficult to say. The industry needs tools that take into account individual contribution rather than just relative performance. The bell curve creates dissonance as it limits the number of high performers."

Internet companies Google, Twitter and LinkedIn do not use the bell curve and a bunch of Indian start-ups has taken a leaf out of their book.

However, GE, the pioneer of the bell curve, has loosened its hold on the curve, being more liberal in how it assesses employees. Microsoft and Adobe Systems decided to end all ratings and put in place a system that focuses on teamwork, collaboration, timely feedback, giving more flexibility to managers to hand out rewards as they see fit.

Their move away from the bell curve was for reasons spanning too much focus on individual performance (rather than team effort), unwanted internal competition, office politics and its propensity to discourage employees from sharing resources and information with peers. Many internet era companies see the curve as less relevant to meet demands of the knowledge workers.

A mid-tier software company has replaced the bell-curve with the performance-curve based on the long tail method. The aim is to identify, reward and develop skills in hyper-high performers, high performers, potential high performers, and so on till one reaches the end of the tail. The difference being that employees are not compared against each other and there is no cap on the number of people who can fall within a particular segment. 

Leading organizations are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development.

ALTERNATE TO BELL CURVE FOR APPRAISAL

Calibration

Calibration is a face-to-face process, in which managers who oversee similar groups review one another’s employee-performance ratings. In these "rater reliability" sessions, supervisors discuss each of their employee’s performance rankings and their reasons behind the evaluation. "A calibration session catches the 'easy graders' and 'tough graders' and helps them rate their employees more realistically," Joanne Lloyd writes on JobDig.com.

360-Degree Feedback

Instead of relying on one supervisor to evaluate an individual’s performance, some companies ask everyone with whom the employee interacts to weigh in. That’s the idea behind 360-degree feedback, a technique that collects performance data from a number of stakeholders like team members, customers and direct reports. “When it’s done well, 360 programs allow all your team members to improve in key areas that might be limiting their upward career path or actually causing major conflict within a team,” Eric Jackson writes on Forbes.

Management by Objective

First outlined by management whiz Peter Drucker, management by objective occurs when supervisors work with employees to outline goals and desired outcomes. Managers evaluate staff members based on their ability to achieve results. The advantage of the MBO process is that it allows employees to actively participate in goal setting, according to the Society for Human Resource Management.

The Ranking/Rating System

The ranking system is a more structured approach, where specific performance variables are laid out. A ranking system of any kind must have explicit variables that employers can refer to.

Examples of this might include revenue generated, overtime hours, ability to work with a group or overall attitude.

The purpose here is to provide a quantitative score in areas that are not necessary quantitative, such as “general attitude.” The purpose is to show which employees are performing well relative to a set of variables that an employer finds the most important.

This methodology requires an employer to develop an in-depth grading system, similar to the way students in school are assessed. This scale is then used to evaluate an employee success within a variety of areas, such as technical skill set, teamwork and communication skills. There is typically a minimum required grade an employee must receive in order for the performance appraisal to be considered a

success. Those that do not make the grade are often put on a performance improvement plan. This method is viewed by some management theorists as an egalitarian way of measuring individual performance.

Long Tail (Power Law)

The long tail is a frequency distribution pattern in which occurences are most densely clustered close to the Y-axis and the distribution curve tapers along the X-axis. The long tail refers to the low-frequency population displayed in the right-hand portion of the graph, represented by a gradually sloping distribution curve that becomes asymptotic to the x-axis. In most applications, the number of events in the tail is greater than the number of events in the high frequency area, simply because the tail is long.

A “Power Law” distribution is also known as a “long tail.” It indicates that people are not “normally distributed.” In this statistical model there are a small number of people who are “hyper high performers,” a broad swath of people who are “good performers” and a smaller number of people who are “low performers.” It essentially accounts for a much wider variation in performance among the sample.

It has very different characteristics from the Bell Curve. In the Power Curve most people fall below the mean (slightly). Roughly 10-15% of the population are above the average (often far above the average), a large population are slightly below average, and a small group are far below average. So the concept of “average” becomes meaningless.

In fact the implication is that comparing to “average” isn’t very useful at all, because the small number of people who are “hyper-performers” accommodate for a very high percentage of the total business value.