The bell curve is a system that has been used for many years to grade employee performance. It is based on the idea that employees are placed in categories of below average, average, and excellent based on their performance.
However, growing evidence shows that the bell curve may not be an effective solution to the entire employee grading system.
Let us dig deeper and explore the relevance of the performance management bell curve in hypergrowth environments and discuss whether or not it is still an effective tool for evaluating employee performance.
What is a performance management bell curve?
Ask HR heads, CEOs, or the founders of hypergrowth organizations and startups what a bell curve is in performance management; they may give you several answers.
In general, a bell curve is used to describe how employees performed relative to one another over a period of time. The curve is named after its shape, which resembles a bell (ref: the image below).
The bell curve can be used to identify problem areas and target interventions. It can also assess the impact of training and development programs.
However, some experts argue that a bell curve is no longer an accurate tool for measuring employee performance. They argue that it fails to consider individual differences and unique circumstances.
Why is the bell curve used? How does the Bell Curve appraisals Method work?
The bell curve is used because it provides a way to compare employees with each other. It can also be used to identify problem areas and target interventions.
Additionally, the bell curve may be used to assess the impact of training and development programs.
When using the bell curve method, managers typically rate employees on a scale from one to five (or one to ten). The employees are then placed into different categories based on their performance.
For example, the top performers may be in the “A” category, while the bottom performers may be in the “C” category.
The bell curve can also identify problem areas and target interventions.
For example, if the bell curve shows that most employees are in the “C” category, the company may need to provide more training and development opportunities.
What are the pros of using a bell curve in performance management?
The bell curve method has its fair share and a long list of cons, but for the purpose of evaluation, let us consider the advantages it offers:
Some of the pros include:
- It provides a way to compare employees with each other.
- It makes it easy to identify those top performers.
- It makes it easier to determine the suitability of a job based on an employee’s qualification.
- It can identify problem areas and target interventions.
- It may assess the impact of training and development programs.
How relevant is the performance management bell curve in today’s hypergrowth environment?
HR heads, CEOs, and the founders of hypergrowth organizations and startups always look for reliable methods to identify and groom future leaders.
They know that the key to sustaining hypergrowth lies in having the right talent in place. The bell curve is a popular method to evaluate employee performance and potential.
But is the performance management bell curve still relevant in today’s hypergrowth environment?
The bell curve assumes a normal distribution of employees across a range of competencies, with a few high performers at the top, a large group of average performers in the middle, and a few low performers at the bottom.
This may have been accurate in traditional organizations where growth was slow and steady. But in today’s dynamic business landscape, things move too quickly for this model to be effective.
In a hypergrowth environment, the bell curve doesn’t consider that everyone is required to perform at their highest level all the time.
There are no low performers because everyone is expected to contribute to the organization’s growth.
This means that the bell curve is not an accurate measure of employee performance in a hypergrowth environment.
At the helm of things, and as a growing workforce, to cast employees based on just one performance method is a recipe for disaster and acts as a deterrent to the company’s growth.
These stats below from Gartner, show that the bell curve doesn’t work in today’s business environment.
- Only 14% of employees worldwide are engaged at work
- According to the survey, 92% of employees are dissatisfied with traditional performance evaluations.
- Managers spend an estimated 210 hours each year on performance management, while workers devote around 40 hours every year.
- More than 60% of employees are not engaged or actively disengaged
- The cost of actively disengaged employees is $450-$550 billion per year in the US alone
- 53% of employees say that they are not motivated with the performance measure standards (Source: Workhuman)
And while HR and business owners work to arrive at a contingent plan to overcome this, employees have already made up their minds to look for new opportunities outside.
So, the Performance Management bell curve is not relevant in today’s hyper-growth environment.
Drawbacks of performance management bell curve
One of the main drawbacks is creating a competitive environment among employees.
Employees rated as being in the lower range may feel like they are not meeting the standards set by the company. This can lead to feelings of inadequacy and low self-esteem.
Additionally, the bell curve may discourage employees from working together collaboratively. Instead, they may feel like they need to compete against each other to get ahead.
Moreover, the bell curve doesn’t consider an employee’s individual circumstances or differences.
For example, an employee may have had a bad month due to personal issues. However, the bell curve would not account for and would still place that employee in the lower range. This can lead to frustration and resentment among employees.
Additionally, the bell curve doesn’t allow for growth or improvement.
Once an employee is placed in a specific category, it isn’t easy to move up. This may cause employees to become stagnant and uninterested in their work.
The bell curve is a relic of the past that no longer has a place in today’s business world. Instead, focus on employee development and growth to ensure that the right talent is in place to sustain hypergrowth.
This will help you create a robust and engaged workforce that will contribute to your organization’s success.
What is the right solution for modern-day performance management?
It is more important to focus on employee development rather than just performance in a hypergrowth environment. Performance should be viewed as a journey rather than a destination.
This means that traditional performance management methods are no longer relevant, such as the bell curve. Instead, organizations should focus on employee development and growth.
This will help to ensure that the right talent is in place to sustain hypergrowth.
“Research indicates that workers have three prime needs: Interesting work, recognition for doing a good job, and being let in on things that are going on in the company.” – Zig Ziglar.
The above quote by Zig Ziglar sums up pretty much what every employee wants. They want exciting work, recognized for doing a good job, and to feel like they are part of the company.
It is essential to focus on these three things in a hypergrowth environment to keep employees engaged and motivated.
If you can provide employees with interesting work, recognize them for their contributions, and keep them in the loop about what is going on in the company, you will have a recipe for success.
These are the things that really matter to employees, not whether they fall into the top or bottom of a bell curve.
The one-key distinguishing factor that should always be an appraisal system is understanding that Performance Management is not an event but a journey.
This means that for you as an employer or HR personnel, it is to have an open mindset about how your appraisal system will look to promote healthy competition, collaboration, and innovation within the workplace.