Should You Grade Your Employees On A Bell Curve?

Exploring the limited pros and many cons of the controversial bell curve method of performance appraisals

If you’re unfamiliar with the bell curve rating system in performance appraisals, simply put, it’s a performance evaluation method that force ranks employees into a bell-shaped best to worst scale, which often looks something like this:

The reason why it’s sometimes referred to as ‘forced ranking’ is because managers have to do just that - forcibly rank all of their team into one of the stated categories regardless of whether they are all performing well or not, which surprisingly can be beneficial in some instances but damaging in others.

So, what are the pros and cons of the bell curve rating system?

Managers tend to rate performance leniently to not create any tension, avoiding the often uncomfortable (but necessary)conversations that could demotivate staff if communicated poorly.  The bell-curve ranking system doesn’t really care about that, and forces management to have those difficult conversations about poor performance meaning serious issues could be addressed right there and then. 

If you have employees that like to work competitively or work in a cut-throat environment such as hard sales or commission focused, the stack ranking method could increase productivity amongst the team to drive sales to avoid being placed in the low-scoring percentage.

The bell-curve model helps management to very quickly identify the top performers, which will prompt reward benefits and recognition that can go a long way to retaining the best talent within the organization.

Managers are forced to put employees in a specific rating just to meet the bell-curve requirements, meaning that some people are graded as ‘bad’ or ‘below average performers’, when that may not even be the case.  The lower scoring employees could still be great performers who meet the role expectations but are pushed into this bottom category simply because there is nowhere else to place them against their peers in this rigid model.

Even employees that perform well may be placed in the middle ‘average’ group which isn’t exactly a motivating classification to be given and is particularly bad as they make up the majority of the team.  If 70% of the employees are working the best they can and are still considered average by the company, then what is that going to do to their engagement levels? They are going to feel demoralized and lack productivity going forward, which will ultimately result in them leaving the company one way or another.

In some instances, bell-curve ranking can even be discriminatory.  A lawsuit in 2017 against Uber by a former engineer, felt the company’s ranking system was discriminating against women and the lower rankings meant lower pay and fewer promotions. 

For example, there will be employees that are meeting the requirements of their role but cannot go that extra mile due to a protected characteristic.  Perhaps a pregnant woman on amended lighter duties that cannot work longer hours or do overtime may be marked down against her peers that can.  When employees are performing to an equal standard, gender bias research has shown that unconscious bias will determine the final score.

Thankfully, Uber threw out this performance appraisal rating method following further negative publicity and decided to transform its appraisal strategy focusing on feedback and improvements instead.

I could go on, but this is not the first time the bell-curve ranking system has received negative reviews. 

Microsoft also made headlines when they axed their curve-rated performance appraisal in 2013 to adopt a better fitting method, but it looks like Facebook is considerably late to the axing party.

Facebook’s culture was recently under scrutiny by former employees of the company, with blame placed heavily on their stack ranking performance review system.

Facebook is often associated with being a fun and energetic place to work, but the last couple of years has unearthed some deep-rooted issues, revealing an altogether darker side.

Former Facebook employees stated that reliance on peer reviews to count towards their appraisal scores created a pressure to forge friendships and interactions, causing anxiety if asked to give honest feedback for fear of retribution, so much so that the culture was described as “cult” like.

Facebook employees are said to need reviews from around 5 of their peers, twice per year and the feedback is anonymous and goes unchallenged.  If you put that against the company-wide limit of how many people are allowed to fit within a certain grade, it’s easy to see how many employees are pushed into the average to underperforming categories and are never able to get themselves back out.

It was hinted at, that the recent Facebook scandals such as misuse of private user data and the government spreading misleading election information on the Facebook newsfeed may have been recognized and dealt with a lot sooner had employees felt that they could actually speak out about these issues. 

That’s why it’s surprising that even with the mass criticism, Facebook still uses this old-fashioned approach to appraisal scoring in such a fast-paced, innovative tech business.

Basically, the bell-curved performance appraisal is plain old fashioned.  There are now better thought out, research-based performance appraisal systems on offer that boost employee confidence, promote collaboration and support team efforts, rather than push individuals to compete with each other.

If an employee is underperforming, instead of telling them they are basically terrible on paper, try to actually get to the root cause of the issue and put a strategy in place that will support them and give them the tools and skills to improve.  It will benefit both them and the organization in the long run.

A solution could be to simply set team goals bringing everyone together to work in-line with organizational objectives, rather than fighting against one another for the top spot.

There doesn’t even need to be a specific name for the way your organization conducts its performance reviews. To be motivating and successful, performance evaluation should try to incorporate the following features
 

With lots of research into effective performance appraisal management, CakeHR has been busy working behind the scenes to develop technology-based features that can help HR better manage the appraisal scoring process. 

Weare excited to announce that our HR software has a soon to be released feature, OKR Goals, which we believe can easily support the flexibility of the performance evaluation.

Objectives and Key Results (OKR) software has become a popular technique across organizations for setting and communicating goals and results. 

It aims to link the company, team and individual objectives to measurable targets enabling people to work together in the same direction, driving operational excellence.

We believe it is an excellent way to track and monitor performance and intercept quickly when performance goals are flagging, better-supporting employees to improve rather than leaving the ‘lower’ performing employees to just give up.

It’s no secret that many companies still don’t recognize the full value and benefits of what a great performance appraisal system can do for their business, but from looking at the widespread negative impact an appraisal system can have on the workforce of these top companies, it’s important that you take a look at your appraisal process and ensure your strategy is working well for both your employees and your organization – perhaps the bell-curve method is exactly the right fit for your culture, perhaps not.

It would be really interesting to hear both the good and bad experiences of the bell-curve system from our reader perspective, so please share your stories below!

Ilona Kalniņa is an experienced HR Specialist with a demonstrated history of working in the education management industry. Skilled in Intercultural Communication, Recruitment, Office Management, and Administration, with excellent People Skills. Strong education professional with a BS focused in Library and Information Management from the University of Latvia. Visit https://cake.hr Follow @CakeHR Connect Ilona Kalniņa