The article discusses the background of bell curve method of performance appraisal, its drawbacks and applicability in Indian context as well as the ways to overcome its pitfalls.

1. WHEN BELL CURVE TURNS HELL CURVE IN APPRAISALS
By: Vishnu Sharma*
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The article discusses the background of bell curve method of performance appraisal, its drawbacks and
applicability in Indian context as well as the ways to overcome its pitfalls.
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 A medium sized Engineering Company based at Chennai ( called ‘Metasil’ hereafter) and
employing around 60 people in Management Staff hired a young HR Consultant to suggest an
Objective Performance Appraisal System to remove biases and over ratings in Appraisals by
Departmental Heads and thereby institute an effective system to reward high Performers and
identify laggards. The HR Consultant had passed out of a leading Ivy League Business School in
US several years back and had worked in HR Departments of two leading Fortune 500 US
Companies. Infected by Euphoria created by Bell Curve Appraisal system adopted by Jack Welch
in GE in post 2005 era, Consultant made a strong pitch for introduction of Bell Curve Appraisal
or Forced Ranking AppraisalSystem in Organisation.
Not understanding the System fully but enthused by potential of a System associated with a
Renowned Company like GE. Metasil implemented the System brutally in each Department, be it
Accounts, R&D, Production or Sales. All hell broke loose in second year and most staff became
de-motivated and started leaving the Company. Good Performers who were consistently rated
Good in earlier years were forcibly rated ‘Mediocre’ to meet Bell Curve requirement. Bell Curve
became Hell Curve for Employees who started dreading the year-end appraisals. R&D and
Product Development Teams started hiding vital information from each other fearing
competitive rating to Colleagues, resulting in undue delays in new product Launches.
MANAGEMENTWASFLABBERGASTED BY END-RESULT. WHAT WENTWRONG?
 A FMCG Company based at Mumbai employing about 250 personnel in its Cosmetic Sales
Division (called ‘Country Herbal’ hereafter) worked with target-based appraisal system for
rewards and promotions . It was baffled by the fact that almost 90% of its Sales Personnelmet
the Targets year after year and were consequently rated A by their Team Leaders. The Company
thought that either it was extraordinarily lucky to have a bunch of most talented Salesmen on
Earth or its system of Target-setting or Appraisal was faulty. It took advice from a Marketing
Consultancy Company and adopted Bell Curve Method for analyzing Performance of its large
field force. It used Bell Curve method as an analytical tool for grouping Sales personnel for
identifying High-performers who could be groomed for future and low-Performers who needed
hand-holding.
Surprisingly, Grouping evolved in to a Standard Bell shape with about 16% employees being
identified as low-performers when a revised mean of Targets was used. There was no forced

2. change of ranking and low-performers were classified as ‘Learners’ who needed counseling,
Training and motivation. Of about 16% Learners, only 3% who were having hardened attitude
were retrenched and rest were taken up for learning and improvement. The process of forced
attrition and re-training continuedfor several years and gradually a skewed Bell Curve emerged
with only 4% people falling in Low Performers Category and most people being classified as
‘very high’ or ‘high’ performers. Management was extremely pleased with results in form of
highly improved sales revenue per person.
WHAT MADE THE BELL CURVESYSTEM WORK? WASIT SHEER CHANCE?
Before we examineabove twoCase studies,Letusunderstandwhatis Bell Curve and Bell Curve System
of Appraisal.
What is a Bell Curve
The bell curve getsitsname from itsshape that lookslike aTemple orChurchBell.Alsocalled Normal
Curve or GaussianCurve,namedafterfamousGermanMathematician Carl FriedrichGauss,itisa widely
usedStatistical Tool inEngineering,Life SciencesandSocial &Behavioral Sciences. Anynatural random
processgeneratingalarge universe of randomvariables iscalledNormal process generatingnormal
Data whichwill follow normal DistributionorBell curve.Forexample,if we measure heightsof Students
ina particularClassin a School havinga large enoughsample size,say100 Studentsthenthe variation
inheightswill follow normal Distribution orBell Curve.
Bell Curve isdefinedby twonumberswhich are the ‘mean’ and‘standarddeviation’.The Standardbell
curve for a givensetof data has centerlocatedat the mean.Thisis where the highestpointof the curve
or “top of the bell“islocated.A dataset‘sstandarddeviationdetermineshow spreadoutourbell curve
is.The largerthe standarddeviation,the more spreadoutthe curve. A normal or Standard bell curve
followsthe 68-95-99.7 rule,whichprovidesaconvenientwaytocarry outestimatedcalculations:
Approximately68%of all of the data lieswithinone standarddeviationof the mean.Approximately95%
of all the data iswithintwostandarddeviationsof the mean. Approximately99.7% of the data iswithin
three standarddeviationsof the mean.
If we knowthata bell curve modelsourdata,we can use the above featuresof the bell curve tosay
quite a bit.For example, if we measure heightof 300 School Boys of ClassX, we may findthat we have
meanscore of 5 Feetandstandarddeviationof 1 inch.Since the standarddeviationis1inch,Subtract
and add 1 inch to the mean.Thisgivesus a range of 5 Feet1 inch to 4 Feet11 inches. Bythe 68-95-99.7
rule we wouldexpectabout68%of 300, or 204 studentstohave heightinabove range.
Two timesthe standarddeviationis2inches.If we subtractand add 2 inchesto the meanwe have a
Heightrange from4 Feet10 inchesto5 Feet2 inches. We wouldexpectabout 95% of 300, or 285
studentstohave heightsbetween4Feet10 inchesand5 Feet2 inches.

3. A Standardbell curve hasone ‘mode’ whichcoincideswiththe meanandmedian.Thisisthe centerof
the curve where itisat itshighest. A bell curve issymmetric. If itwere foldedalongavertical line atthe
mean,bothhalveswouldmatchperfectlybecause theyare mirrorimagesof eachother.
WHAT IS BELL CURVE SYSTEM OF APPRAISAL
The Bell Curve system of Appraisal was pioneeredbyRenownedCEO JackWelchfor appraisal of Upper
Managementduringhistenure atGeneral Electricunderthe name "VitalityCurve".Atpresent,20
percentof the large US Corporatesfollow the 'Bell Curve RatingMethod',the mostprominentbeing
Conoco,Hewlett-Packard,Microsoft,FordMotorsandnotoriouslyEnron!
Variouslyreferredbyothernamesalsosuchas ForcedRankingMethod, 'Rank andYank' method,'up or
out' policy, DeadMan’s curve or 'vitalitycurve',whatitoriginallyimpliedatGE wasthat at leastten
percentof the company'sstrengthhas to be replacedeveryyear.The systemthoughcontroversial is
fairlypopularinHR circlesabroad." It isa differentiationprocesswheremanagersare requiredto
evaluate anemployee'sperformance, basedonpredeterminedcategories,againstotheremployeesin
the departmentorpeergroup . These employeeperformance rankingsare thenappliedtoabell curve.
Those that rank at the bottomof the curve:usuallythe bottom10%, are puton probation,coachedto
improve performance,orterminated.Those atthe headof the curve,usuallythe top20%, are
generouslyrewardedfortheirperformance .There isnosingle wayof implementingthisratingprocess -
the conceptencompassesanysysteminwhichindividualsare ratedagainstone another.
The systemisbasedon the normal distributionof employeesona bell-shapedcurve.Companiesuse it
to tempertheirappraisal processes, tocorrectmanagerswhotendto overrate theirpeople.The
correctionis basedon statistical premisethatinanycompanyonly20 percentof the total population
can reallybe consideredexceptional.
WHAT WENT WRONG AT METASIL
Two basicconditionstobe metfor anydistributiontofollow normal Distributionare sufficientlylarge
universe orsample size andnatural process.Whenwe applynormal distributiontospeciallyhiredand
chosenManagers,it isno longera natural processbutbecomesa forcedprocess.A forcedprocesswill
neverfollowanormal distributionbutwillratherfollowskeweddistributioncurve.Forexample,if you
recruita pool of EngineerTraineesfromamongstToppersof BatchesinIITs,the distributionof
Performance will notfollow normal distributionbutmayfollow aflator slightlytaperingLine curve.This
isbecause processisnot natural but forced.However,if youpickup100 UnskilledWorkmen randomly
froma village andputthemonsame job,the distributionof performancewillfollow normal orBell
curve distribution.
Metasil erredinforciblyapplyingBell Curve tosmall Teams of Managerial Staff rangingfrom6 to 15
people,separatelyineachDeptt.Thiswastoosmall a sample size forBell curve andresultedinforcible
classificationof some goodperformers amongstlowest20% of Bell curve spread,resultinginde-
motivationandchaos.

4. WHAT WENT RIGHT AT ‘COUNTRY HERBAL’
CountryHerbal usedBell Curve SystemselectivelyinaDepartmentwhichhadlarge enoughSample Size
to enable the implementationof Systemcorrectly. Italsousedthe tool mainlyforidentifyinglow
Performersandbringingthemupthroughsustainedtraining. Itwasnotusedfor Promotions,rewards
and punishments. There were noforcedRankings,therebyavoidingantagonismandhostilityfrom
Employees.
APPLICABILITY IN INDIAN CONTEXT
Applicationof Bell Curve methodof Appraisal hasnotmetrequisite successinIndiadue totypical Indian
Ethos.The Systemof firingbottom10% of EmployeeseveryyearadvocatedbyJackWelchispossible in
Hire & Fire culture of US but isneitherpractical noradvisable inindiancontextforbothlegal and
cultural reasons.Appliedblindly,BellCurve cancreate havocin Organisationandcanbecome a Hell
Curve for Employees.The Systemshouldpreferablynotbe usedfordecidingPromotions,Increments,
Rewardsandpunishments.However,beingagreatanalytical andidentification tool forimproving
Organizational performance,itshouldbe usedassuch, on case to case basis only inselected
Departments whichemploy large noof people. BellCurve system suffersfromfollowinginfirmitiesin
Indiancontext
- Difficulttounderstandandde-motivatingforEmployeesdue toforcedandtemperedartificial
rankingsinorderto conformto Bell curve
- Unfair, illogical andarbitrary fromEmployees’perception
- Inability tofire bottomperformersof Bell curve andhence limitations onfollow upactions
arisingoutof Bell Curve rankings
- Wide choice inselectivelyhiringGoodemployeesinIndiadue tolarge pool of Technical and
managerial Manpoweravailable andhence possibilityof buildingupahomogenousuniverse of
highand veryhighperformers,asdistinctfromUSand otherdevelopedCountrieswhichoffer
limitedchoice of Employees.
- Cannotbe appliedinsmall &mediumsized Organizationsandindividual departments due to
small Sample size.
- WeakTrainingbase and weakTrainingculture inmostindiancompanieswhichcannotbringup
lowperformers of Bell Curve throughsustained Training.
- Nomenclature of Ratingfollowedinmostindian companieswhichclassifyEmployeesas per
A/B/C/D Class-roomlikeratingsorGood,Average,Poorratingnomenclature whichisnot
compatible withBell Curve’sexpectedoutcome.
- Notconducive toTeam Work due to Competitive ratingsratherthanindividualratingsin
absolute terms.Introducesapredatoryculture inTeamMates and a suspiciouswork
environment.
- HighEmployee TurnoversandinjurytoEmployer-Employee relationshipandtrust
*Authoris workingasSr VP andBusinessHeadinDS Group,Noida. Viewsexpressedinthis
Article are personal andhisown