Working the Bell Curve

At my previous job, our company was bought out. We went from a smaller company that believed in hiring the best and the brightest, training them appropriately, and giving them what they needed to succeed, to a small part of a larger corporate structure. Part of the large corporate structure was the institution of a bell curve for worker reviews.

In case you don't know how this works, basically it says that each manager selects 10% of his/her workforce and designates them as "stars," 80% are marked as "adequate," and another 10% as "failures" or "needs improvement." Some companies break the 80% up into sub-categories, but essentially you still wind up with the majority getting the equivalent of a "C" in school, a few getting an "A" grade, and the rest getting the equivalent of a "D" or an "F" grade.

The problem with this way of doing reviews is this: why would  you hire people that are going to fail or will need a lot of improvement? And, if the same person gets the needs improvement grade enough times, they will either quit or be fired. This doesn't sound bad, at first, until you realize that you are left with "C" and "A" people who, on the next review cycle, must now be dropped down.

For example, let's say you are a manager of a company with this policy. You have ten employees. This bell curve style of reviews means that you can only select one person as a star, eight people who are generally adequate and do their work in a competent fashion, and one person who "needs improvement." Companies are often fine if you don't select anyone for the star level but they usually insist on you selecting someone for the lowest level each review cycle. Many companies have two review cycles a year, a non-monetary review and a monetary review.

If you like your employees, you either have to cycle through each person (and keep track of them) so that everyone gets to be a star and everyone gets to be inadequate or, after two bad reviews in a row (sometimes more, but companies are usually pretty strict), you fire a person for not being adequate or they leave due to frustration. To keep the bell curve working, though, you now have nine employees and one of the "adequate" employees has to be moved into the inadequate category and the cycle starts again. After two bad reviews, that guy leaves/is fired and you are down to eight employees. Rinse, repeat.

Again, during the hiring process, you are seeking out individuals who have strengths where you need them and who you think will fit into the corporate structure (or, at least, the structure you have created and workers you have already hired). You generally are seeking long-term solutions to whatever issue you have that is causing you to hire people. Therefore, your expectation is that everyone will be at least "adequate" and you hope to hire as many "stars" as you can, so your little part of the company works as smoothly, efficiently, and profitably as possible.

Let's give another example with the same setup. You are the manager of 10 people in, let's say, a sales department. Over the last six months (your company has biannual reviews), all ten of your employees have met the sales quotas you have given them. A few exceeded them by a large margin but most came in around or slightly over the figure you gave them. When review time comes, even though you had, let's say, three people double the sales quota, you can only pick one person to be the star due to the bell curve. That means, in essence, you are telling two other people that doubling the sales quota isn't enough to be a star and to get the perks. At the same time, even though, let's say, three people barely achieved the quote -- but did make it -- you have to select one of them (minimum) to say, "You did everything I asked you to, but it still isn't enough and you need to improve."

The end result of this scenario is that you have now negatively motivated three people (or 30% of your work force) into doing less work. The two who strove hard, did well, and did not get praised for it are now demotivated to work that hard for the next six months (and probably irritated at the one guy who did the same amount of work they did but did get the positive praise for it) and the person who worked his ass off, made every quota, and did as much as you told him to is now not motivated to work any harder and is probably seeking employment elsewhere. You may have also demotivated the one you picked as a star, because now he has two employees angry with him and he doesn't want to be singled out again because he knows they were just as deserving. You have also, possibly, scared and demotivated the two other people who barely made quota. So, now 60% of your work force is demotivated, working scared or angry, and possibly looking for work elsewhere, for a job where they will be praised for their hard work and making quota.

Now let's look at the same scenario without a bell curve. You now have seven employees who were adequate and did exactly what you wanted and what you hired them for. They get the praise they deserve, which motivates them to continue to do the job requested (at least). You give star status to the three people who greatly exceeded your expectations. All three feel the praise and are motivated to continue to work as hard going forward. The other seven see that praise (and, presumably, the rewards that go with it) and work harder to be a star, too. And, as manager, you motivate the three at the bottom by saying, "Because everyone met or exceeded my quotas this term, we're going to increase the quotas a bit and see if we can't do even better in Sales this next term! Go team!" This is a subtle, but positive, way to motivate the three at the bottom who barely made the quota that they are going to have to work harder, smarter, or better.

In this scenario, you have 100% who have received praise and are encouraged to keep working hard. Only 30% have any negative associations to the review (the bottom three, who barely made quota this term but know the quota is now higher for the next term), and the remaining 70% have positives to look at and to work toward (becoming a star employee and getting the rewards inherent in that position).

This second scenario also creates a natural bell curve as you keep raising the bar for all of your employees until you find who can hack at and who can't. Then, you can start giving those at the bottom the "needs improvement" treatment... but the remaining employees don't feel the same pressures as those of our first scenario. And, if any of those at the bottom quit or are fired, you have a new set of expectations with which to interview and hire replacement employees: you have the work ethic and attitudes of the stars to use as traits to look for in the new hires, you have your new sales goals to use as a barometer, and you have the team dynamic (which is much more positive) to consider when determining if the new hire will succeed with your team.

Now, I will grant that sometimes a new hire (or even an old hat at the job) is not properly prepared or able to do the job for which he/she was hired. They lied on their resume, a life event occurs that affects their job performance, or maybe you stretched to get someone who fits in one aspect and you hoped to "train them up" on the other aspects and it doesn't go as planned. Whatever the case, only when a person truly is doing an inadequate job, is not meeting your job expectation, can't make his/her deadlines, etc. should you give them a bad review. The bell curve should happen naturally/organically; there is no need to force one on what is otherwise a group of good to great employees, as all that does is demotivate your entire group.