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Bell Curve Appraisals – Good or Bad?

high potential
Employee Surveys
Author:
Pratisrutee Mishra
June 3, 2024

There is a constant debate on how effective the bell curve appraisal is for  performance management in 2024. In the era of increased assessment accuracy, use of bell curve as a matrix of gauging workforce performance has been facing reliability humps. However, it is questioned upon its undervaluation of high performers due to the nature of inflation of the normal curve. To clarify and unveil the truth behind the efficiency of the bell curve method for performance appraisal, we have compiled a ton of evidence and interpretations. Let's jump into discovering the truth and debunking the myths. 

What is a Bell Curve in Performance Appraisal?

It is a graphical representation of a normal distribution of performance ratings within an organization. It starts with team managers rating the performance of their members as per their observations through the past session. They rank their employees in broadly three categories: high, average and low. 

It is a statistical model of probability that has been traditionally used to identify performance levels across a workforce. The core assumption of the model is that most employees will perform averagely, while fewer employees will be exhibiting high or low performance bell curve.

bell curve performance management

Bell Curve performance management is a method that differentiates employees’ performances on the basis of a general rule. This rule assigns 68% of the area under the curve of total workforce performance for exclusively average performers, and the remaining 32% is approximately divided into two parts constituting the tails of the curve. One half (16%) is high performing and the other half (16%) is low performing. 

The bell curve in HR context sets a standard for a normal workplace set-up and prioritizes the development of extremely low performers for maintenance. However, it does not favor the high performing minority and their development in career. It often leads to failure of identifying and retaining high performing employees. So how do you use a bell curve efficiently?

History of the Bell Curve Method For Performance Appraisal

bell curve appraisal

Stacked ranking, Forced ranking, or Rank-yank, call it anything but the concept of bell curve performance evaluation, has a fascinating history. 

Just as measuring employee productivity dates back to the industrial revolution, so do the techniques of it. While the organizations sought ways to assess employee performance systematically, they encountered many biases and variables that influence the true results. 

The bell curve in hr, as a statistical and standardized tool gained significant popularity in the 1980s when Jack Welch, the renowned CEO of General Electric (GE), implemented it within his organization. It has since been a common practice in many organizations to manage and analyze employee performance bell curve.

The Use of Bell Curve in Performance Appraisal

Bell Curve in Performance Appraisal

As an HR professional, effectively utilizing the bell curve method for performance appraisal involves thoughtful implementation and consideration of its pros and cons. Let’s explore how you can efficiently incorporate the bell curve method:

Step 1 - Understanding the Bell Curve

The bell curve in performance appraisal is also called a normal distribution curve. It represents a symmetrical spread of employee performance data. The name of the curve is derived from its bell shape with the majority of values concentrated near the tails. It assumes that overall performance metrics follow the normal distribution.

performance bell curve

The accurate measurement of a bell curve is as follows:

  • 68% of the population lies within 1 standard deviation of the mean.
  • 95% lies within 2 standard deviations of the mean.
  • 99.7% lies within 3 standard deviations of the mean.

Step 2 - Performance Distribution and Categorization

To build a bell curve method for performance appraisal, HR professionals require arranging employees into predetermined positions of categories of the Normal curve or the Gaussian curve. It is important to evaluate their performance or output, benchmark the three points of differences, and statistically plot their relative positions across expected performance criteria. The overall performance is primarily divided into three categories: 

  • Top Performers: These performers have high achievement and comprise 10% of the workforce population. They are the employees with leadership potential and need to be retained.
  • Average Performers: These employees deliver moderate performance and comprise 70% of the total population. The employees in this category require motivation and upskilling to elevate their performance.
  • Non Performers: These performers are struggling to achieve targets. They constitute 20% of the workforce and require heavy learning and development programs to improve their performance. 

Step 3 - Connecting Analysis to Consequences and Rewards

It is important to link analysis with actions. Performance ratings of the bell curve in hr need to support decision making on compensation, promotions, and other rewards or consequences. For instance, excellent performers may receive increased bonuses or faster promotions. In contrast, the poor performers must be subject to performance improvement plans. It can also help us check the overall deviation of performance from the ideal instances:

  1. Left-Skewed Interpretation: As shown in graph A, if the performance ratings of employees exhibit left-skewness, it is observed that most employees perform at an average or below-average level. Here, fewer employees will receive exceptionally high performance ratings. In such cases, HRs would need to adjust performance evaluation criteria, identify training needs for low-performing employees, or address potential biases in the rating process.
  2. Right-Skewed Interpretation: As represented in graph C, if the performance ratings are right-skewed, many employees will receive high ratings. There is a need to look out for Leniency bias (overrating employees) and Lack of differentiation between high performers. HRs can aid this by refining rating scales and also by  providing clearer performance expectations.
  3. No Skew Interpretation: As per the normal distribution curve graph B, if the spread of dataset is not skewed, and is well balanced, then the HRs can consider the performance of the organization to be up to mark.  (e.g., kurtosis, outliers) alongside skewness. 
bell curve appraisal

Step 4 - Tips to Make Bell Curve More Efficient

The bell curve surely provides a framework to consider individual context. Some employees may not fit neatly into predefined categories. Therefore firstly, the use of bell curve alongside other post hire assessment techniques needs to be adapted by the HR Team. 

Secondly, regular review and calibration of the distribution must be ensured. This can be done by adjusting percentages based on organizational needs and performance trends.

Lastly, a clear communication about the appraisal process needs to be conveyed. Employees deserve an explanation of how the bell curve impacts their performance evaluations.

Why is the Bell Curve used?

Bell Curve is traditionally used as a standardized measure of workforce. It helps in identifying training needs and removing manager bias by fairly rating employees with genuine performance ratings across different departments or teams. Some key applications of Bell Curve in Performance Appraisal can be listed as follows: 

  • Comparative Analysis: It allows for a relative comparison of employee performance within the organization.
  • Identifying Talent: It helps in identifying top performers who may be suitable for leadership roles or special projects.
  • Training Needs: It can pinpoint areas where employees need more training or development.
  • Reward System: It aids in creating a merit-based reward system, ensuring that top performers are recognized and rewarded.
  • Fair Performance Evaluation: It provides a standardized method to evaluate performance, reducing individual manager bias.

Benefits of Performance management based on the Bell Curve

The popularity of bell curve is earned due its empirical nature of workforce performance evaluation. It generated data that can support HR professionals in making informed decisions in talent management. It scientifically infers the characteristics of the workforce as a singular body, and allocates value to each of the members as per their contribution. Some highlights of performance management based on the bell curve are:

benefits of bell curve appraisal

Disadvantages of Bell Curve in Performance Appraisal

While Bell Curve method for performance appraisal did its part in the past, modern performance evaluations seek to be more accurate and unbiased of factorial influence. Due to its arbitrary plotting method, it is highly prone to manager’s biases. Hence, many big corporations have abandoned the bell-curve method to evaluate their workforce performances. They recognized the need to adapt more dynamic approaches that focus on employees' individual contribution, potential, output and aspirations. 

The drawbacks they experienced using bell-curve method were:

disadvantages of bell curve

Alternatives to the Bell Curve Appraisal

Due to the criticism of the Bell Curve in HR, many high tech alternatives popped up to aid. Methods such as continuous feedback systems, personalized development plans, performance assessments, and employee surveys based on individual goals are being considered. These propose a more holistic and individual-centered approach to performance appraisals. Here are a detailed account of how they contribute:

  • Continuous feedback systems: This feedback system covers both employees and managers rather than solely relying on strict annual reviews. Immediate feedback can aid quick adjustment in rules, improves communication flow, and also increases engagement.
  • Personalized development plans: It focuses on individual aspirations and potential. It encourages skill enhancement, aligned growth, and motivation driving. It also plays a role in keeping the workplace a positively competitive environment.
  • Performance assessments: This can include high potential assessments, managerial assessments and other Post-hire assessments that comprehensively report the overall profile of the employees. This method has recently gained a lot of attention from top MNCs and corporations as it delivers predictive insights into the job position. 
  • Employee surveys: The more important it is to assess job performance, so it is to check for engagement and happiness. Employee happiness surveys can indicate that the work system and teams are operating on a healthy and positive edge. On the other hand, job satisfaction surveys provide data on how driven your employees are to produce their best. Both combined, give engagement metrics relevant to the developmental plans that you make.

Conclusion 

Bell curve appraisal has been a traditional staple method to gauge performance due to its structured and empirical approach. However, its one-size-fits-all nature constricts the modern day organization in aligning growth of employees with their goals. It is increasingly finding Bell Curve Performance Appraisal inadequate to capture the diverse and collaborative nature of contemporary work. 

The organizations today strive for innovation and agility, and alternative performance management systems emphasize continuous development, individual strengths, and team dynamics. Hence, a good era of the Bell Curve in HR is coming to an end. 

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PMaps - Frequently Asked Questions

Learn more about this blog through the commonly asked questions:

What is a bell curve analysis?

Bell curve performance appraisal analysis is a symmetrical graph with a curve shaped like a bell and two tails. It is often used to visualize the distribution of employees across productivity as certain values in a graph.

What is the purpose of the bell curve?

The bell curve performance management is often used for appraisal in an organization. However, there have been striking debates on its effectiveness and efficiency. This shows that results of the bell curve appraisal can often be unfair.

How is the bell curve calculated?

The general formula for interpreting a bell curve performance appraisal analysis is 

Top performers: 10-20% (to be rewarded)

Average performers: 60-80% (no intervention required)

Low performers: 10-20% (to be trained)

However, the range varies from organization to organization.

Why is the bell curve important in performance appraisal?

The bell curve performance management is a quick way to analyze the company's performance on the basis of employees. Even though it turns out to be often unfair, at least it provides a structured framework for performance appraisal. Some alternatives of bell curve performance management are: continuous feedback systems, post hire assessments, employee surveys, etc.

How does the bell curve method for performance appraisal work?

The bell curve identifies the category of employees based on three distinct segments of performance. This results in a bell-shaped graph when plotted with performance rating and employee output. The three categories: top performers, average performers, and low performers indicate the position of teams and individuals in relative comparison to others in the organization. The ones who come under the lowest category are provided with training, while the top performers are rewarded for their contribution.

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