Is It Time to Stop Forced Employee Rankings?

If you have any familiarity with statistics you have most likely heard of the Bell Curve. The Bell Curve is also referred to as the Normal Distribution, and has been regarded as a great way to rank employee performance for a long time.  However, recent studies have shown that this statistical model is not so great at all in actuality.

One of the negative aspects of the Bell Curve is that it does not take the specifics of an organisation into account, such as how the employees of a particular company accomplish their goals. The Normal Curve forces the large majority of workers to be ranked as average, while the rest are ranked as either exemplary or awful.  Simply put this “grading system,” so to speak, is very limited in what it can tell employers about their business.

This diagram shows the difference between a Gaussian (normal) distribution and a Paretian (power) distribution. The primary difference is that in a Paretian distribution the majority of the sample is below average.

Research conducted within the last couple of years has shown us that almost all businesses follow a Power-Law or Paretian distribution, rather than a normal one. In a Power-Law distribution there is a small percentage of poor performers, a large percentage of good performers, and another small percentage of high performers. This ultimately gives employers more of a range of performance when it comes to rating employees, and doesn’t leave quality employees feeling “just average.”

When you actually take a step back and think about it ,it makes sense that research has found most companies operate under this non- Normal Curve statistical model in reality . There are always the top performers who outshine everybody in the business, the good worker who takes care of business when things need to get done, and the office bums who people wonder how they even got the job in the first place. Of course companies want as many high performers as possible in their organisation, but the fact is they can be hard to come by. Managers need to try and grow more of them from the middle guys.

It seems the consensus throughout the HR world is that some re-envisioning needs to be done in relation to performance reviews.  The whole point of a review is to align employee’s objectives with organisational goals. Make the review process for the employee feedback-focused and employee development-oriented. In addition, think about your organisational culture. Do your managers really believe in “Bell Curve” distribution when it comes performance evaluation or do they believe that good performers can become high performers? Does your organisation needs to change its mind-set about the way employee performance is perceived?

Employee rankings using the Normal Distribution Curve is something that needs to be reconsidered by those in power. It needs to be an ongoing process, not a single number given after a year’s worth of work.  It should reward those who deserve recognition and help improve or highlight weak links. Each and every company out there wants to keep developing to become the very best they can be.  For this to occur the days of the Bell Curve must come to an end, and the Power-Law distribution must rise.

 

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