Should You Use A Bell Curve in Performance Management?

Jun 30, 2017
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bell-curve

A significant challenge most companies face is how to accurately assess performance and implement an effective system for employee performance appraisals.

Bell curves initially rose in popularity in the 1980s. They were traditionally applied in performance appraisals as a method of segregating elite performers from average performers, and further distinguishing below par employees from the overall average.

A bell curve places employees’ workforce performance on a normal distribution scale, with values based solely on individual performance ratings within a team.

Since the corporate world is constantly evolving, many companies are evaluating whether bell curves are a current and operative method of performance management.

While there are pros and cons to the normalized ranking system, the bell curve reveals serious flaws in accurately analyzing employees individually, which may consequently affect business operations over time. The following three reasons describe why bell curves may no longer be relevant for rating employee performance.

1. Forced Rankings Do Not Work with Collaborative Teams

Regular workdays no longer consist of the 9-to-5 office regime. Business practices are constantly advancing, and with that performance management methods must keep up to be effective.

Emerging trends of collaborative employee approaches negates the efficiency of the bell curve performance ranking system. For example, an employee might score higher on the curve than a co-worker who is on their collaborative team, placing an unfair superiority on the higher-ranked individual. If one co-worker simply scores higher than another, employees will begin to fall under average company rating standards.

Performance appraisals should therefore be conducted on an individual’s expectations inclusively, not on the group distribution scale that bell curves require.

2. Bell Curves Produce Inaccurate and Unfair Assessments

When teams exceed performance goals, performance cannot be accurately measured on the bell curve. The bell curve forces individuals to rank low on the scale, even though they have surpassed expectations.

Employee performance appraisals can subsequently lead to higher probationary periods or increased turnover rates. More money might inadvertently be spent on recruiting and training new employees rather than refining individual performance within the team. In this case the use of a bell curve in performance management can be vastly imprecise.

Companies that have adopted the bell curve method in the past have looked at the bottom 5-10% of ranked employees as disposable, instead of focusing on improvement within teams.

The unfortunate result of utilizing a bell curve ranking system is expensive employee replacement and excessive training.

3. Bell Curves Depreciate Employee Morale

Forced company ratings for employees weaken your top performer’s value while inflating the value of middle performers. The bell curve rating system damages employee morale by force grouping top and low performers regardless of their actual performance. Employees who fall in the middle of the curve make up 80% of the team population, forcing your budget management to focus on mid-value employees.

Salaries have been commonly incremented based on the bell curve’s ranking system, which does not accurately reflect employee’s qualifications and overall performance. Salary scaling also has negative consequences for employee morale and can misallocate budgets.

Replace a defective employee performance system with a 360 feedback appraisal system that effectively ranks an employee’s performance based on individual work, not against the work of their peers.

Bell Curves and Performance Management

The bell curve provides a forced ranking of employees that distinguishes stellar performance from average or below par performance. Many companies have used the bell curve in recent decades; however, it is no longer effective in ranking individual employee performance in modern group environments.

The global workforce has recognized the need for change; even corporate heavyweights like Microsoft and Google have realized the redundancy of organizing performance standards with a bell curve. Bell curves discourage collaboration and decrease productivity. Forced rating of employee performance causes more problems than provides beneficial resolutions.

The bell cureve system is inefficient upon workplace dynamics in the current corporate economy. With the rapid development of modern technology and the rise in millennials in the workforce, company protocols must evolve. Performance appraisal systems must adapt advance with corporate teams and allow companies flourish in the competitive business world.

Is your company ready to evolve your performance appraisal system? Schedule a live web demo, take a product tour or contact us toll-free at 1-888-668-6162.