Saturday, May 16, 2009

For Whom The 'Bell' Tolls

I was working on developing a career management system for my company and in that context was critically evaluating the performance appraisal system as well. One of the most debated ways to assess performance in organizations is the dreaded Bell Curve. Forced ranking assesses employee performance relative to peers rather than against predetermined goals. Managers rank employees into three categories: The top 20 percent are the people who will lead the future of the company. They're given raises, stock options, and training. The middle 70 percent are given smaller raises and encouraged to improve. The bottom 10 percent are contribute the least and may be meeting expectations but are simply "good" on a team of "greats." They're given no raises or bonuses and are either offered training, asked if they'd be happier elsewhere, or fired.

I was reading Jack Welch's Winning and came across this passage on forced rating, bell curve and differentiation (For the uninitiated, Jack Welch, retired Chief Executive Officer of General Electric (GE), is most often associated with forced ranking, since GE used this performance management tool to eliminate the bottom ten percent of performers each year.) :

Differentiation starts right from our school days with our grades and play-ground where the best players get picked first and the least athletic ones watch from the stands. Everyone knows where he/she stands. The top kids want desperately to stay there and continue to get the thrill and respect of winning. the kids in the middle work hard to get better and thus bring up the quality of play. And the kids who couldn't make the cut usually found other pursuits, other sports in which they excelled. this is true on the playground and it is true in business.

When differentiation is working, people know where they stand. Maybe some information is hard to swallow at first but soon enough, knowledge is liberating because when you know where you stand, you can control your destiny.

Differentiation brings out the positive impact of an open, honest management system built on candid performance assessments and aligned rewards. For the top performers, the very existence of a middle cadre gives them yet another reason to pull out all the stops everyday. They have to keep getting better to have a high standing. For the middle performers, the aspiration to get into the top level makes them work harder, think more creatively, share more ideas and overall, fight the good fight everyday.

Now, coming to the detractors of forced ranking, I have heard many say that it is not ethical. My view on this is - any system or process is nether ethical or unethical - it is the implementers who make it so. A lot depends on how fairly the system is developed, and how fair the people are who carry it out.

Forced Ranking may be hard on the under-performers, people who are not dependable, determined or persistent but truth be told, organizations are not charitable set-ups where they are obligated to carry these non-performers with them, on emotional grounds. And more importantly, a laissez-faire attitude where everybody gets an exceptional / very good rating makes the ranking meaningless to employees. Would that not be the case if everyone in a school stood first?

But, having said that, I definitely feel the emphasis should be on the correct way to implement the process. Clear, transparent and honest communication of process and feedback goes a long way in building credibility of the system and its processes. If the Forced Ranking system is a way to make power centers in the organization where those who fall out of favour with the boss / are not 'Yes-Bosses' are chucked out, such a system is doomed to implode. If you don’t give people what they need to perform well and expect them to succeed, if you set a measure to which people should perform and don’t give them the tools to do it, then it is an unfair process, set up for failure and politics to set in. But if the evaluations are carried out in fair ways, and if people know the grounds or expectations on which they are being evaluated, it could be a reasonable way to reward growth and ability and to cull unpromising or under performing employees.


  1. well..
    i was a bit uneasy when i started reading this post.. the length n the theme was a bit uncomfortable for me at first..
    but now, after reading it feels really great, im having the feeling that ive gained something that would be important for me in future..
    thanks for sharing it :)

    In my lineofsight

  2. DD,

    This needs more deep thinking. I will try to read Jack Welch's book but on the face of it I disagree with his example of school days and sports. There is a vast difference between school days where each student has an opportunity to show his or her worth in academics while sports is not everyone forte. I subscribe to the idea of judging performance of an individual without any comparison to others. The Appraisal Proformas could be developed in 3 or 4 parts with specific traits. I have done so in some of the companies I worked with. Main point to be kept in mind is that the persons reporting should be unbiased and that has to be drilled into those who have to undertake this task. Also it should be one above tiered with at least 2 persons reviewing the report. I really look forward to have more discussion with you on this. You may write to me at , if you feel comfortable.

    Looking forward to your views on my recent posts.

    Take care

  3. @ Jack : Thanks for your views. The school / sports example is an analogy to bring home the point that grades exist across all spheres of our life - and there is a need to differentiate, to encourage the good performers to excel and the bad ones to either get trained to rise up the rank or quit the race.

    Appraisal system, as I have said, should be fair and am sure every company has its own take on the way in which it can be made fair. However, fair it must be, to instill credibility in the process.

  4. "My view on this is - any system or process is nether ethical or unethical - it is the implementers who make it so."

    - I could not agree more with you. I think its the ethical orientation (or lack of it), of the the implementers that make for a fair or unfair appraisal system

  5. Any process which remains dependent on people /implementors can't be fool proof.And therefore would need lots of checks .

  6. DD,

    There is no denying that it is necessary to differentiate and reward the performers while others are encouraged to be ones. I agree with you about appraisal system being fair, first step to which is being unbiased and judging one by his or her output, in many cases this can be quantified.

    Thanks for your visit. Now a serious one is coming up in next 2 or 3 days.

    Take care

  7. Hmm the system in a way sounds stupid.

    Take 11 best IPL players from across all teams.
    (Analogy for recruiting process, which anyways intends to take in the cream)

    Then observe them throughout the tournament. Obviously since it is the team of all the best 11 heavyweight players of IPL, this hypothetical team will win most matches hands down.

    Yet this maniac owner of the team isn't satisfied. He is fuming over the 1 or 2 matches the team lost.

    So he brings in the bell system or whatever the heck its called. The player of this team who performs the least is gonna be replaced next year he says.

    Sab players ki chaddi dhili. Pet mein gudugudu.

    The team does reach the finals (obviously. Its the best).

    10 runs left to win.

    the player no 10th and 11th of the team (both in ranking and batting order) are at the crease. Player ranked 11th on strike. His score 10. Other guy's score 10.

    He thinks...if I give strike to the other fellow now, he will probably hit a few boundaries and our team will win. But his score will exceed mine and I'll be chucked out!

    So basically he hits the ball close by and still starts running. So the other person has to start running too, though unwillingly, and gets run out.

    So the team loses, but the player with initial rank 11 has one more run than the one originally ranked 10. So his overall ranking, technically speaking, now becomes 10. Other guy gets the axe. Team loses. But this fellow wins. All thanks to the bell crap.

    Instead if, the owner had been wise and realised that all players have actually done well, and that slight differences in points are an inevitable statistics, and made everyone feel good and secure, their team, the best team, would have one :P

    In fact the name itself intuitively suggests that its an unnatural, sick, stupid thing.

    'Forced' ranking. sheesh.

    I love only natural things.

  8. @Stupidosaur: You are assuming that players are ranked on a single parameter, number of runs. That is never the case and performance appraisal system usually takes into consideration many parameters and tries to take a holistic view.

    Also the cricket analogy is not quite right. Just because your partner has called for a run, you need not run. That is why you hear so many "Noooo's" during matches.

  9. In a hurry right now...would surely read the post and comment again.
    Just wanted to tell u that there is an award waiting for u on my blog! grab it soon!
    Sorry for not reading the post right now..I really gtg asap:(

  10. That was a nice post.. At work I see and face quite often and has to take some decisions which might sound harsh but are on the right grounds.. Just coz some one is very dedicated and loyal to company and working with us from long time does not qualify him for a raise.. it is the performance which matters end of the day. Like you said, we can not do it on emotional grounds.. couldn't agree more.. if you are in business you will have to keep biased mindsets and emotions in side and think logically.

    Been said that, some times when I make such decisions, I really feel bad for the guys who are trying their level best on all other fronts especially dedication and efforts but still not an outstanding performer in terms of productivity and results, but cant help it.. cant do a charity.. such is life or I should rephrase such is professional life!!

  11. Differentiation starts right from our school days with our grades and play-ground where the best players get picked first and the least athletic ones watch from the stands. Everyone knows where he/she stands.

    so true

    and i feel at times it does good and bad... dunno what is more and less

  12. @ donscave : Yes... and while we tend to look down upon the system for its faults, it is the people who implement who are to blame. It is akin to science really... whether we use the nukes to blow up a city or generate electricity - the science is not to blame, the user is.

  13. @ Anonymous : Totally agree. So while the appraisal system is a subjective process, dependent on managers, plenty of systemic checks
    need to be in place to ensure it happens in a fair, transparent and credible manner.

  14. @ Jack : Yes. In fact, the more you quantify it, the more unbiased way it will be. However, to differentiate between two performers who have
    achieved the same numbers, HOW the work has got done also needs to be given due importance. There should always be some principles which are

  15. @ Stupidosaur : There are two flaws in your argument :
    ONE :The owner (and in Business, the manager) will need to evaluate on what you do (the runs / quantitative) as well as how you do it (qualitative - which is where the subjectivity comes in). As Boundlessdreamz has said, there are multiple parameters (and not just runs / numbers) on which you evaluate an employee - at least that's how it should be. Else, you'd find all those who get in good sales for a business rising up the ladder, even though they may be unethical / bad people managers / not a team player etc. And such a system will implode,
    very soon. It is unsustainable.

    TWO : Forced ranking does not say that you remove the bottom performers in the year you rate them so. Forced ranking is a tool. It can be customized and used as per your company culture. So there are companies which uses this tool to inform their lower layer and then train them / do job rotations to suit their skills - bad performance does not mean the employee is necessarily dumb. There could be a role mismatch / personal issues / just a bad year for business. Managers are supposed to take an informed decision while using the tool. Again, my argument - the tool is neither good or bad - the implementers are.

  16. @ Boundlessdreamz : Agree!

    @ akanksha : Thanks... will drop by...

    @ Scattered Thoughts : Yeah... in fact that's why I guess, the higher we move in hierarchy, the more difficult it becomes (and hence more
    important) to remain humane.

    @ d gypsy! : I think at school level, during formative years, it may do bad for you as well since you can become insecure / develop an
    inferiority / superiority complex. But as an adult, it is always good to know where you stand.

  17. Good analysis but we should discuss this when we meet next.

  18. @Boundlessdreamz
    //You are assuming that players are ranked on a single parameter, number of runs.

    Nope. Its you who is assuming that I assumed. Points are awarded for wickets by bowling, wicket keeper's wickets, boundaries stopped, runs stopped, intimidating the opponents with words, and of course runs. Then again points are deducted for dot balls played, boundaries given by bowler (with no fault of fielder), extras, etc.

    Complex enough? I even included things like 'runs stopped','intimidating the opponents','boundaries given by bowler' to include the subjective ambiguities. Its within these ambiguities that the corporate-human game of 'favourites' often gets played.

    And holistic my foot. When the faceless corporate machinery gets rolling, its just about 'statisctics' :P.

    Sly fellows are good at getting the right 'statisctics' into that machinery.

    //Also the cricket analogy is not quite right.

    There is no such default thing as analogy, and especially a right analogy :P. You got to be intelligent enough to be able to see one and fit it in all its complexity.

    //Just because your partner has called for a run, you need not run.

    Haha! You just walked into the trap! Just see how, if a superior is hell bent to mess with a person, he can use this:

    Say the person does not run. He will be screwed under pretext of lack of co-operation and team spirit.

    Say the person does run and the result is a mess. He will be screwed under the pretext of poor judgement, waste of resources and sacrificing others (just in case the other fellow gets out in confusion)

    On the other hand, if the person was licking up the superior all the time, not running will be 'sane head on shoulders under pressure'.
    Running and messing up would be seen as 'dedicated to team, willing to put in extra something, bravado and spirit, full of potential, but ah well, sometimes luck is tough'

    //That is why you hear so many "Noooo's" during matches.
    Yeah and they work because there is no 'forced' shit in the picture.

    I think KKR was all about 'forced' shit. "You better perform sucker, or you are a goner (out of the team" for the soldier in the battleground. While the big bosses, who are the ones who actually suck, are safe and sound and on high ground!

    Such system definitely kills any natural warmth and team feeling between any set of people :P

    And look how KKR won!


    I would have replied your reply too. But its kinda become boring for now. Anyways by your rate of posting, this post will be around when I drop by a few months later. (Ah the follies of thoughless managerial extrapolation!). So I can comment at leisure!

  19. @stupidosaur: Let me not assume anything. From your original comment. "system in a way sounds stupid". All you have explained is how you can get screwed if your boss doesn't like you. That is not the flaw of the system. And if your boss wants to screw with you a performance management is not the only tool at his disposal. So if you continue to stay at such a company, where you get screwed over by your boss and colleagues (sly fellows?), then it is not the system which is stupid, it is you who are being stupid by staying with that company/boss. You cannot evaluate a person objectively [there no set statistics]. Someone might be good performer but might be net drain on the company due to abrasive attitude etc. Since subjective valuation is a must, if the persons evaluating you are biased against you, no system can protect you 100%.

    And abt KKR, please, "you are gone from the team if you don't perform" is the right strategy for any team. Look how well the Deccan team performed after VVS was chucked out. So that is not why KKR lost. KKR lost because the team didn't perform as a unit and didn't gell together. If it was "perform or get fired" there would have been atleast individual performances to avaoid that fate. That too didn't happen. So I don't know where you are getting the idea that KKR debacle happened because the team was asked to (*horror* *horror*) "perform"

  20. To take the cricket analogy further, if this post is about discussing the qualities of a bat, your comment is akin to "hey, the guys i know who use this bat beat me up regularly with it. So the bat must be bad".In reality, the source of your problems are the ones holding the bat and not the bat itself but you are blaming the bat :)

  21. may be you are interested to read-- Designing Performance Appraisal Systems
    Aligning Appraisals and Organizational Realities
    by Mohrman, Edward Lawler, Susan

  22. There is never a thing as fairly judging another person.
    Try judging your own son. Judging is one of the most complex things, ever asked yourself why God doesnt kill the corrupt??? Go ask God and I am sure he will give an earth full of reasons why the Bad guy in your view is needed....

    Jugdging is one of the most complex task that I would rather say... it can truly be done only by God (Meaning its impossible).
    So why do it... when you cant do it correctly..
    At least why do it "forcefully" like in corporates
    It should be avoided as much as possible.