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SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 48
THE BELL TOLLS NO MORE IN PERFORMANCE APPRAISALS
Niveditha Venkatachalam
Priyadarshini Padmanabhan
M.B.A. – Year -1
M.O.P. Vaishnav College for Women, Chennai.
Contact no -9444998930, 8056261468
Email: [email protected]
Abstract
This paper talks about the bell curve system, which is used as a tool for HR processes like
Performance Appraisal and Compensation model. The work of HR managers is to distinguish the
performance of the employees as good, average and poor. The bell curve is used as a tool to
distinguish and distribute in each of these segments. Bell Curve or Vitality Curve is often known
as 20-70-10 system where the employees are fit in one of these segments.
A research conducted in 2011 and 2012 by Ernest O‘Boyle Jr. and Herman Aguini using 198
samples found that performance in 94 per cent of these groups did not follow a bell curve.
Rather these groups fall into "Power Law" distribution. The paper also details on that
concept.
Furthermore, the paper also goes on to talk about why the bell curve system of performance
appraisal needs to be scrapped. It mentions various reasons as to why this conventional system is
not the most suitable anymore and describes in details about how it hampers the espirit de corps
at the workplace. The paper goes on to quote real-life examples of businesses such as IBM, TCS,
Wipro, Infosys and Accenture that have finally decided to get rid of this archaic system.
As a potential substitute for the bell curve, the paper describes the identified replacement –
IBM‘s Checkpoint, a five-point scale system.
It is vital that HR fraternities understand that the bell curve method is no longer the most suitable
one and there is a need to shift to better systems of performance appraisal that will help them
gauge performances better and provide more realistic and accurate feedback ratings.
Keywords: Bell curve performance appraisal, Power law distribution, IBM‘s Checkpoint
SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 49
1. Introduction
One of the major activities of the Human Resources is Performance Appraisal. Various tools
were proposed in order to assess the performance of the employees.
Vitality curve was proposed by Jack Welch, CEO of General Electric. This vitality curve is also
called as ―forced ranking‖, ―rank and yank‖, ―forced distribution‖ and ―stack ranking‖.
The bell curve or the vitality curve is a tool implemented for HR processes like Performance
Appraisal and Compensation model. The performance ratings of the employees are assessed by
the different department managers and the HR managers distinguish the performance as good,
average and poor. The Bell Curve is used as a tool to segregate the ratings of the employees in
each of these segments.
2. Methodology
The Bell Curve
The Bell Curve is often known as 20-70-10 system where the employees are forced fit into one
of these segments. This indicates that 20% of the employees are more productive, 70% are
average workers and 10% of the employees are non-productive.
10% 70% 20%
Jack Welch classify them as ―A‖, ―B‖ & ―C‖ players where he says that the player A is filled
with passion and exhibit 4 Es of leadership – High Energy levels, ability to energize others, edge
SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 50
to make decisions and Execution of the work. The players B are not driven but they are
important for an organization because they are the majority of the group. The player C is said to
be non-productive and are immediately fired. Jack Welch admits that the judgments are not
always precise. The player A is rewarded with more incentives and promotion while the player C
is dismissed.
This bell curve has an effect on each and every employee because the player ―B‖ may move to
the position of player ―A‖ due to the encouragement and motivation from the top management.
But there are more chances of an ―A‖ player stepping down to position ―B‖ due to the pressure
experienced by the employee. Since the employees are forced to fit into one particular segment,
there are chances of segregating the performance in the wrong segment which affects the
employee morale.
Power Law Distribution
A research was conducted by Ernest O‘Boyle Jr. and Herman Aguini using 198 samples in 2011
and 2012 which included people from various professions who found that the performance in 94
per cent of these groups did not follow a normal distribution/bell curve. Rather these
groups followed "Power Law" distribution.
Average Performers
Low Performers
Hyper High Performers
SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 51
There are a small amount of people who are "hyper high performers," a broad group of "good
performers" and a smaller number of "low performers‖. It is very different from Bell Curve‘s
characteristics.
There are no exact percentages where employees are forced fit into one particular segment. The
employees are arranged in one particular broad category based on their performance ratings. In
Power Law Distribution, roughly 10-15% of the population is above the average, a large
population is slightly below average, and a small group is far below average. So the concept of
"average" becomes meaningless in bell curve.
3. Discussion of findings
Scrapping the bell curve
The bell curve‘s purpose in the system of performance appraisal has been established. However,
these are the reasons as to why there is an increasing need for it to be scrapped:
Forced ranking system of appraisal
The bell curve system is a rigid framework, where the focus is more on force fit rather
than allow for realistic ratings. Essentially, employers are forced to limit their ratings in
order to achieve a bell curve for the aggregate of their ratings.
Fosters mediocrity
There are high possibilities that this method would foster mediocrity, where employees
might tend to relax and be satisfied with lying just in the average in the crowd. They
might deem it extremely competitive to try to get better to reach the better end of the
curve and would end up being laid-back. This will result in deterioration of job
performance.
Stimulates unhealthy competition
In a crowd of overachievers, the bell curve system is not feasible. If one was to
implement it in such a scenario, it would translate to looking into minor nitty-gritties and
that would only stimulate unhealthy competition. That is almost never desirable in an
organizational set-up.
Unsuitable for small firms
SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 52
The system would also prove to be unsuitable for small firms because of the small sample
size. Results of the system run in a small organization have very high chances of being
inaccurate and incorrect.
The demerits of the bell curve system of performance appraisal outmatch its merits and this
might be the reason for most of the leading organizations to shift to other methods of
performance appraisals. Some of the firms that have bid goodbye to the bell curve are Tata
Consultancy Services, Wipro, IBM, Infosys and Accenture, to name a few.
Natarajan Chandrasekaran, former CEO of Tata Consultancy Services said, ―the recent
appraisals did not follow the Bell Curve model. We are appraising employees on individual
performances, and appraisals will be more regular than an annual or quarterly feature‖.
IBM’S checkpoint
As a possible alternative to the conventional methods, IBM, in 2016, came up with various new
appraisal measures for its Indian operations and one of the new appraisal systems is Checkpoint.
It is a five-point scale system, where employees are subject to four yearly reviews, as opposed to
the annual review of the previous system. The previous system was known as PBC, i.e. personal
business commitment, where employees were appraised on the basis of single digits and mostly
from just one quarter in a year.
Here, employees are review and reassess their targets, goals and objectives as the year
progresses. These are essentially checkpoints or milestones that are to be discussed, upon which
immediate feedback is provided. This system was co-created by employees by means of an
internal social media campaign. This was done by ―continuous, transparent feedback loop of
discussions, debates, updates, design iterations and user experience testing,‖ according to a
written statement from IBM.
The parameters considered by Checkpoint are:
Business results
Impact on client success
Innovation
SAMZODHANA – “Journal of Management Research”
Vol 8 Issue 1, April 2017
www.eecmbajournal.in | 53
Personal responsibility to others
Skills
Under the system of Checkpoint, it is ensured that employees review and meet their targets
throughout the course of the year. It is also ensured here that they don‘t get rewarded on just one
single quarter where they performed well. This system hopes to maximize output, productivity
and efficiency of the employees. The main emphasis here is that this is through the course of a
year. Hence, this would be a suitable alternative to the traditional and out dated system of bell
curve appraisals, as this is more holistic in nature.
4. Conclusion
A study at the Indiana University suggests that rather than describing how humans perform, the
bell curve may actually be constraining how people perform. To conclude, it would be safe to
say that the bell curve method of performance appraisal is no longer the most suitable and that
there needs to be some sort of a disruptive HR practice to evolve to better methods of
performance appraisal, which would be better in gauging and giving realistic ratings.
5. REFERENCES
Tushar Bhatia, 2016, ―Use Of Bell Curve in Performance Appraisals – Good or Bad?‖ –
http://www.mpxtrack.com
Anirban Sen, Neha Alawadhi, 2016, ―Good bye annual appraisals, IBM says hello to
Checkpoint‖, Economic Times Tech, February 03, 2016
John Bersin, 2014, ―The Myth of the Bell Curve‖, http://www.medium.com
Shankar Vedantam, 2012, ―Put Away The Bell Curve: Most Of Us Aren't 'Average‖,
http://www.npr.org
Ernest O'Boyle Jr., Herman Aguinis, 2012, "The Best And The Rest: Revisiting The
Norm of Normality of Individual Performance", Personnel Psychology, 27 February
2012, DOI: 10.1111/j.1744-6570.2011.01239.x
MQIT Corporation, 2013, ―Vitality Curve‖ https://mqit.wordpress.com
M. Saraswathi, 2016, ―Companies move away from 'Bell Curve' appraisal system‖
https://www.business-standard.com
