Forced Ranking and Bell Curves – Ask #HR Bartender
Today’s reader question deals with an issue that’s been in the news lately – performance appraisals.
Could you please address the practice seen in most companies of forced calibrations and the bell curves to evaluate employees against each other?
Forced ranking is a method where employees are compared to other employees to determine the best and worst performing employees.
The bell curve system uses a distribution basically saying that there are a small number of best and worst performers (on each end of the curve) and the majority of people fall somewhere in the middle (the highest point of the curve).
Honestly, I’m not a fan of either bell curves or forced ranking. I believe that employee performance should be evaluated against the company standard. That’s why companies have standards for performance. Here’s an example I’ve dealt with before:
We have a sales department with 10 people. Each sales person has a goal to sell $1M annually. It’s the end of the year and time for performance evaluations. The manager ranks everyone in the sales team by annual sales and wants to give the biggest increase to the person who sold the most and the smallest increase to the person who sold the least. Makes sense, right?
What if I told you that the person who sold the least…sold $10M? Yes, they sold 10 times their goal.
Somehow it doesn’t seem right to give the smallest increase to a person who significantly exceeded their goal. Because the problem isn’t the person. It’s that the goal is too low.
This is the challenge with forced systems. It makes the assumption that there are employees not performing to the company standard. What happens if there isn’t?
If organizations develop a company standard, they can:
- Hire individuals based upon their proven experience and/or ability to meet the performance standard.
- Train employees to have the skills and abilities to deliver the company standard.
- Coach and counsel employees to keep their performance above the company standard.
- Measure performance based upon the company standard.
On any given day, employees know exactly where their performance rates compared to the company standard.
I do understand there are companies abandoning forced ranking (i.e. Microsoft) and others implementing it (i.e. Yahoo). Ultimately, companies have to do what’s best for them and their employees. And that’s really what it’s all about – if forced ranking gives the organization a workforce full of high performers, then great! If it creates an environment of unhealthy competition, then another option might be better.
The goal of performance appraisals is to improve performance. Companies need to decide the best system to do that. However, it’s always a good idea to consider the needs of their employees in the process.
Image Courtesy of HR Bartender
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