Strategic HR

The Counsellor: Performance & the bell curve

Vivek Paranjpe•

16 January 2014|

Updated on 6 March 2019

Managers don't give balanced feedback and hence a natural omega curve does not appear

Recently, a multinational tech giant planned to implement the bell curve to rank employees in the organization. The practice of ranking workers on a bell curve has long been associated with controversy. Many called it the company's latest HR disaster. Critics argue that it can adversely impact innovation and demotivate employees. The company defended the move saying that it was not a forced ranking and did have some wiggle room. The internet tech giant has been struggling to retain its market lead and the CEO has been undertaking radical steps to bring the company up to speed. But the employees seem to be unhappy with the latest move, according to media reports. Will stack ranking help lift the morale of the employees in such a case?

To begin with, let us accept some fundamental truths. Most of the line managers as well as HR professionals don’t like to force fit the employees into an Omega / bell curves. However they continue to do so for various reasons and will continue to do so, until some elegant solution is found.

If managers and leaders are judicious and are unbiased, the Omega curve should naturally emerge, since there are always three types of employees – Those who meet the performance expectations, those who exceed the performance expectations and those who don’t come up to the expected levels.

However, in real life, it is observed that managers are not judicious and they don’t give balanced feedback throughout the year. At the end of the year they have a tendency to be liberal when it comes to determining the performance ratings. This happens mainly because of some of the reasons illustrated below.

Leader plays a safe game and want to be nice to remain popular.

It stems from a sense of insecurity – a belief that we will lose these employees who are rated poor. This happens due to non-development of right pipeline of good talent who can take over from exiting employees. Mangers are willing to live with the average talent in the company rather than lose them.

Performance rating gets used in the company for salary reviews, PLI, Other incentives, potential assessment etc. A leader does not want his performance evaluation and rating to be the reason for denial of the growth to his people, hence he refrains from giving the rightful rating and the feedback that must follow. He just becomes liberal.

Performance goals and targets are not properly set at the beginning of the year hence leaders find it very difficult to face the employees at the time of the evaluation.

Lack of role clarity, reporting lines, strong informal network in the organization, inadequate resources, etc. are many a times the cause for poor performance.

Lack of regular reviews, feedback on an ongoing basis, lack of regular coaching to help people succeed, etc. leads to the leaders’ inability to face up the employees and give them the appropriate performance rating.

Most of what is illustrated above is due to the poor leadership capabilities. This in turn leads to a situation wherein the true performance is not being differentiated and therefore most of the people get rated at the higher end of the performance curve. Culture of meritocracy can’t be nurtured and the mediocrity sets in.

Since Bell curve / Omega curve does not emerge in the “natural course”, the Organization forces the Omega Curve on to the leaders with the distribution guidelines that go with it. Many organizations also enforce forced ranking. This leads to a situation wherein the leaders communicate to the employees the reason for poor performance rating as: “irrational Omega forced by HR”.

Leaders just don’t own the responsibility to communicate the difficult feedback. HR professionals themselves don’t like this situation either. Hence, the employees are denied the right feedback and therefore the opportunities for them to develop get denied.

Existence of Omega Curve helps in multiple ways

Distribution of the people in various performance bands leading to differentiating people based on their performance. This in turn helps:

Top performers get rewarded liberally - therefore motivation for them to continue with good performance and also a retention mechanism due to liberal rewards.
Poor performers get a wakeup call, to start ramping up their performance. Some may quit, and that is fine, as long as the Leaders were judicious in rating their people.

A culture of valuing the meritocracy sets in the Company.

A good aid in understanding the true caliber and capabilities of the people and therefore one of the inputs in determining the development strategies.

Differentiated performance means “judicious distribution” of the financial budgets that are earmarked for the salary increases and the PLI.

Bell curves have to be different for the different segments / levels of the organization, one can’t get a corporate or unit curve, it has to be different for different business / sites / different job levels / roles.

Forced stack ranking or Omegas don’t help lift the morale of the employees. What we need is a fair, robust and transparent performance management system that focuses on year-long support and feedback with developmental efforts from the leaders.

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Vivek Paranjpe