It won’t be an exaggeration if I tell you; the world is divided in three sets of organization. The one who have abolished bell curve for performance management, the ones who continue to think bell curve is right approach and third group is sitting on fence, observing, wait and watch method.
Researchers say, bell curve method of performance management was adopted from military’s up-and-out promotions model. This was further put in practice effectively and popularized by General Electric CEO Jack Welch, The “rank and yank” system that he popularized results in workers being pitted against their peers to avoid being labelled as losers. Those workers who ended up on the wrong side of the ranking curve were penalized, usually by a denial of merit raises or bonuses, and sometimes by losing their job.”
There were more diverse reaction on the usage of bell curve resulting in law suits but it has sustained the test of time so certainly has relevance and effectiveness.
Microsoft was amongst the first big product centric organization to let go the bell curve method of performance management, recently it was followed by Accenture and Infosys. When big organizations of new economy like Microsoft, Accenture and Infosys discard a process, everyone else starts thinking about it.
There are two ways to look at it, what exactly you want to drive, are you product company and can only thrive on innovation or a service company where excellence is the key. Excellence and Innovation is applicable to both and can be interchangeable enabler but our priorities must be clear. If you are product innovation company, bell curve may not be right method for performance management, you want people to think differently and explore their unique potential, come out of new ways of customer experience with products, if you force bell curve on these employees if may not get the right output. Microsoft, Accenture and Infosys, must have the thought through and figured it out, instead of comparing with each other, employees must start competing with self, challenge more. Thus create a culture of innovation and individual’s excellence without comparing with others.
In contrast, in a typical service company, Bell Curve will be right indicator of employee’s performance. We must stay competitive and fight to be the best when the nature work across multiple employees is almost same. Bell Curve drives performance and excellence amongst employee, competing with each other positively has its own importance. Absence of performance management system like bell curve will create further confusion; will be extremely difficult to drive excellence where the work is of similar nature. Point you may raise, Accenture and Infosys are service company, why they have changed the approach, they must, because their focus and strategies have changed. Infosys has increased its Innovation Fund from $100 million to $500 million, which is focused on investing in early stage companies and universities to gain access to new thinking and technologies as per the strategies outlined by new CEO Vishal Sikka, one example how strategies change the way we do business and manage people.
Albeit both the methods have its pros and cons, Bell Curve will continue to be a performance management method especially in human capital economy unless we come with better alternatives. As an employee, I have been into bell curve through my career and depending upon where we land, it decides your likeness for the curve, I always liked it. Its necessary and everyone won’t be satisfied with it, these satisfaction issues can easily be tackled with effective communication, convey the importance of bell curve.
5 things you must be doing to ensure bell curve really works for you:
- Start measuring performance of your employees from day one and create visibility around it. Remove subjectivity in KPI measures at employee level, all business goals are data driven. Subjectivity drives confusion and impacts moral of employees. Never forget to add an element of self learning in measures.
- Don’t force employees into bell curve; you are doing injustice. Let the data do the job , never get your salary budget to drive the bell curve.
- Create a cultural where importance of bell curve is understood in black and white, the importance of good performance should not diminished in front of 10-20% high performers.
- Don’t give up on employees in lower bracket, something didn’t work for them. In all likely they need more guidance, coaching and direction. They are your hidden asset.
In a hindsight, Dlibert gets it right every time!