Still Trapped by the Performance Bell Curve?

Time to release yourself

It’s that time of the year. Performance Reviews.

Is your company still leaning on the Performance Bell Curve?

Yes? Time to read this.

Let’s start with fundamentals.

The Bell curve is a just a visual for a ‘normal’ distribution - A normal distribution of anything that can vary from one occurrence to another.

Example:

As you stand at the door of Grand Central Station and watch people come in, you will notice they are of different heights. If you plotted the heights of all these, say 1000 people, their heights should be normally distributed. This normal distribution will visually be the bell curve. This is the simple statistical idea of a bell curve.

You will see, the greatest number of people are at the middle level of height.

The fundamental factor that drives this and any normal distribution, is that each event (in this case, people entering Grand Central Station) is random. You have no influence on who enters Grand Central Station.

Randomness is central to a Bell Curve.

I have no idea when the bell curve insidiously inserted its way into companies to manage Performance Ratings. I am not the first one who is horrified by its proliferation – other people have also written about it.

The application of the bell curve to performance ratings has a counter effect to the core idea of performance. Companies applying the bell curve may not realize that it is trapping value and performance. It is not releasing value or increasing overall performance.

But before we even go there, the application of the bell curve to performance ratings is statistically and mathematically flawed.

Think of the World Cup that many of us are currently occupied with.

Is it possible to distribute players’ performance within a winning team as per a bell curve? In a winning team all or most people are performing well. You don’t have some poor players, some great and most playing just average. Their performance is not distributed as per a bell curve.

If that is the case with a soccer/football team, how is it possible that in a winning company team, the distribution will be any different?

It will not be.

The reason is simple. High performing teams are not built on randomness. When you hire for your team, like a football team, you hire the best talent. You don’t say, I will hire some great talent, some poor talent and most hires will be average talent. Worse, you don’t stand at the door of Grand Central Station and hire anybody who walks through the door.

If you don’t hire talent randomly then how does talent get distributed in a bell curve at performance time?

The answer is that the application of a bell curve by companies is a method to control budgets. It has nothing to do with performance.

Forcing a distribution of people under a bell curve helps companies pay some people great, some very poorly, and most, on the average. It has all to do with pay and nothing to do with performance.

Managing budgets is not wrong. Any smart company will be right to focus on its expenses.

However, a bell curve is not the device to manage expenses for the following reasons:

• It is an incorrect application of a statistical concept.

• It turns great teams into normal teams.

• The ‘forced’ nature of the effort causes angst and significant motivation damage.

• The process of ‘forcing a bell curve,’ wastes leadership and HR time.

• Smart talent is unable to comprehend the core rationale because the application is flawed.

• It reflects a culture of control and lack of trust. (“Left to themselves, people leaders will always over-rate their teams.”)

• For all the above reasons, it traps performance of people and traps value for the company.

If the application of the bell curve to performance ratings is flawed and you still need to be prudent about your budget, how do you do this?

• Expand team bonuses. If the proportion of bonus paid on team or company effort is high, a company’s seduction into the bell curve trap can be less.

• Empower leaders to take performance and bonus decisions at the level of a team within a finite budget. Enhance budget of those teams that do well compared to other teams, keeping the total enterprise budget as constant.

• De-link budget from performance. Let ratings happen naturally first: Then apply payment factors to ratings.

Like with any trap, once released, the heights of performance that can be reached by individuals and teams will surprise leaders obsessed with the bell curve.

A bell curve attempts to force a natural phenomenon. That is never good.