IMPLEMENTATION OF THE BELL CURVE
The Bell Curve and Forced Ranking are NOT appraisal systems. The Bell Curve is only a tool used by companies to justify their comparison of employees within the company and their budgetary constraints. Once the rating has been decided the appraisal is just a administrative procedure, since the bell curve has become one of the most used tool and an integral part of Appraisal system its generally termed along with the appraisal system.
It is NOT an appraisal tool because it does not have built-in performance standards and metrics to distinguish an Outstanding, Good, Average, or Poor performance.
I think the bell curve appraisal system is better known as the Forced ranking appraisal systems. It require managers to rank their employees from best to worst, apply the rankings to a bell curve and use the results to determine pay as well as who to fire. Actually I know what forced appraisal method is like…like in there are two extremes a good and a bad..and the manager has to rank his employees accordingly…say an honest employee will be ranked in the top 10% and likewise…
Personally I am completely against the implementation of Bell Curve appraisal system. Three major flaws I see in this system are:
- 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 leave.
- When this system is implemented in a department where the performance has been very good and the company cant afford to fire the lower 10% the bonuses and the raise in salary is quite less compared to other departments and hence sooner or later the firm seems the top 20% leave because they are not happy with their respective packages.
- This system alongwith improving the top performers in your company would also attract hyper competitive nature among employees and hence resulting into a dysfunctional working environment in the same department.
Now for the implementation:
Its generally based on three levels of performances the top 20 is extraordinary the mid 70% is ordinary but the backbone of the company and the rest 10% are the guys who are worthless and cant be trained and hence are fired if the performance doesnt improve for three consecutive years.
The appraisal system is done department wise and The respective line managers are supposed to rate employees into these three groups.
The candidate who is not able to come out of the lower 10% for two/three years is then fired.
Will have to agree that the bell curve with a few tweaks can be very fruitful.
Before the implementation of the Bell Curve Appraisal System, You have to ensure the following,
a) Use of objective parameters for the performance appraisal system.
b) Determine the reason for poor performance of the employee if there is any.
c) Let the employee take responsibility for improved and only offer your assistance if needed.
d) Document all the performance related discussions with the employee
Now the following came across to me during a discussion with a friend, she used to work for ABB and hence the practice followed by ABB is just awesome a smart solution to the bell curve appraisal system.
The main business strategy of ABB is customer focus. It aims to achieve it through TQM, time-based management and supply management. ABB has four business segments in Pakistan comprising about 30 independent business areas. Each business area operates like an independent company with its own strategic plans and budgets. Teamwork is central to the achievement of ABB’s strategy. Traditionally, ABB’s performance appraisal system focused on individual performance and results, and its compensation system rewarded high performers. Although eminently logical, this system of appraisal and compensation discouraged teamwork, which was the prime requirement for a customer-focused strategy. ABB has changed its appraisal and compensation system to foster teamwork. There are nine aspects to the current system: –
Change of nomenclature: The present system is called the developmental appraisal, not performance appraisal. This emphasizes the role of appraisal in promoting individual learning and development.
Planning the job for the following year: This provides role clarity and builds a common understanding between the individual and the team leader.
Counseling for development: Counseling is an integral part of the appraisal system emphasizing openness and disclosure.
Team performance: The individual’s contribution to team performance is of major importance.
Process parameters: Process parameters with emphasis on quality, customer focus and systems form the core of the appraisal.
Training: The appraisal system is used to identify the training needs for individuals and teams.
Focus: The appraisal system has a single focus, namely development of individual and teams.
Client-centered: The developmental appraisal system is exclusively client-oriented. There is no complex web of procedures with perforated sheets and flow charts maintained by the human resource department. The forms remain with the team leaders and team members.
Label-free ratings: There is no overall rating with labels such as ‘outstanding’, ‘good’, and ‘average’.
ABB has also developed a system of compensation for its managers that promotes team effort. In ABB, a business area, which is roughly equivalent to a strategic business unit (SBU), is judged on certain performance parameters. Based on the performance of the business area, the team members in that particular business area receive a percentage of the basic pay and allowance as lump-sum payment. All members of the same grade receive exactly the same percentage. Performance parameters include both qualitative and quantitative indicators. Quantitative parameters include orders and profits. Qualitative indicators include factors such as on-time delivery. The company classifies individuals into three categories: –
Group A includes those who perform far below expectations with special counseling being provided to such individuals.
Group B consists of ideal performers with performance exceeding the expectations of the organization. They are given non-financial rewards in addition to flat equal increments.
Group C comprises individuals who perform strictly according to expectations. All of them receive exactly the same amount of bonus and increments.
To summarize Bell curve by itself is strict no according to my opinion but a few tweaks and this should be the best solution.
I hope the above clears all doubts on drawbacks and implementation of bell curve appraisal system.