Bell Curve Appraisal

A bell curve, or more specifically, a Gaussian Distribution, is a

symmetric curve that is pronounced in the middle, and tapered off at
the edges (it really does look like a bell). As such, the middle portion
under the curve contains more area than either of the ends. The Bell
Curve appraisal system is better known as the Forced Ranking
Appraisal Systems of a companys employees. Forced ranking has
been defined as a workforce management tool based on the
premise that in order to develop and thrive, a company must identify
its best and worst performers, then nurture the former and rehabilitate
and/ or discard the latter. It categorizes people based on their
performance, rewards or penalizes them accordingly. Ranking
employees is everyday practice at companies like General Electric
(GE), Microsoft, Cisco Systems, Hewlett-Packard, and Sun
Microsystems.
The entire workforce is segregated as the top performers, medium performers and the poor
performers. The percentage varies with the company policy; it could be the top 10%, middle
80% and the bottom 10%.
B e ne fi ts :

The workers, who are high performers, are motivated to keep improving themselves
with the incentive of stock options, higher pay etc.

The majority of the workers, who are classified as average performers, are provided
with opportunities to enhance themselves with various training modules and other
tools of improvement. This increases the companys competence level as a whole.

The low performers are warned that they need to get their act together and thus, the
productivity of the organization slowly improves

Accountability, which is the purpose of performance appraisals, is enforced across

the organization by using Bell Curve.

Fl a ws :

The problem with Bell Curve methodology begins with its application. The distribution
curve can only be applied to an organization with certain number of employees as a
threshold. With small number of employees, the categorization of resources becomes
too constrained, and more often, erroneous.

Bell Curve method for performance appraisal always creates a doubt about the
fairness of the classification system. Many times employees show increased activity in
the time period approaching appraisals. Hence, the bias towards visible performance
as against actual performance may overshadow fair categorization.

Distributing incentives based on Bell curve methodology cannot guarantee an

increase in the companys overall performance. It happens only over a long period
of time.

By Ranjita Brahma

Bell Curve Appraisal

The Bell Curve system is too rigid a model to be followed, especially in a country like
India, where the work culture is dominated by an emotional approach.

Often, a manager is forced to classify people in the last gradient of the Bell Curve,
but, it might not reflect the managers actual perception about the worker.

In certain circumstances, a high performer gets slotted as a mid-level performer in

order to normalize the distribution curve, which defeats the purpose of performance
appraisals.

The Bell Curve has a cost to it attrition. The bottom percent of people may be there
because of statistical compulsions, rather than the fact that their managers think they
deserve to be there. This ultimately leads to attrition and adds to hiring costs of a
company.

The Bell Curve tries to push everyone into the best worker category, but, the truth
remains that organizations are more often run on the combined efforts of the socalled average work force.

C he c k p oin ts B ef or e I m pl e m e n tati o n o f B e ll C u rv e :
Before the implementation of the Bell Curve Appraisal System, Please ensure the following

Use of objective parameters for the performance appraisal system.

Determine the reason for poor performance of the employee if there is any.

Let the employee take responsibility for improved and only offer your assistance if
needed.

Document all the performance related discussions with the employee because
generally the bell curve system attracts a lot of law suits by fired employees in the
west and hence its better to have all the discussions documented for you and your
company's safety.

There are nine aspects to the current system

1. Change of nomenclature The present system is called the developmental appraisal,
not performance appraisal. This emphasizes the role of appraisal in promoting
individual learning and development.
2. Planning the job for the following year This provides role clarity and builds a
common understanding between the individual and the team leader.
3. Counseling for development Counseling is an integral part of the appraisal system
emphasizing openness and disclosure.
4. Team performance The individual's contribution to team performance is of major
importance.
5. Process parameters Process parameters with emphasis on quality, customer focus
and systems form the core of the appraisal.

By Ranjita Brahma

Bell Curve Appraisal

6. Training The appraisal system is used to identify the training needs for individuals and
teams.
7. Focus The appraisal system has a single focus, namely development of individual
and teams.
8. Client-centered The developmental appraisal system is exclusively client-oriented.
There is no complex web of procedures with perforated sheets and flow charts
maintained by the human resource department. The forms remain with the team
leaders and team members.
9. Label-free ratings There is no overall rating with labels such as 'outstanding', 'good',
and 'average'.
Organization also needs to develop a system of compensation for its managers that
promotes team effort. Based on the performance criteria of the business area, the team
members in that particular business area receive a percentage of the basic pay and
allowance as lump-sum payment. All members of the same grade receive exactly the same
percentage. Performance parameters include both qualitative and quantitative indicators.
Quantitative parameters include orders and profits. Qualitative indicators include factors
such as on-time delivery.
The company classifies individuals into three categories
Group A includes those who perform far below expectations with special counseling
being provided to such individuals.
Group B consists of ideal performers with performance exceeding the expectations of
the organization. They are given non-financial rewards in addition to flat equal
increments.
Group C comprises individuals who perform strictly according to expectations. All of
them receive exactly the same amount of bonus and increments.
To summarize Bell curve by itself is strict no according to my opinion but a few tweaks and
this should be the best solution.
Application of Bell Curve for performance appraisal must be tweaked to yield better results.
Few tips are

Decoupling of lay-offs from the bell curve results.

Customizing of the bell-curve methodology to suit the organization structure & needs.

Combining other performance appraisal methods with the Bell Curve approach.

By Ranjita Brahma

Bell Curve Appraisal

How to Create a Bell Curve Chart in Excel
A bell curve is a plot of normal distribution of a given data set.

In the following example you can create a bell curve of data generated by Excel using the
Random Number Generation tool in the Analysis Toolbar. After Microsoft Excel generates a
set of random numbers, you can create a histogram using those random numbers and the
Histogram tool from the Analysis Toolbar. From the histogram, you can create a chart to
represent a bell curve.
To create a sample bell curve, follow these STEPS :
1.

Start Excel.

2.

Enter the following column headings in a new worksheet

A1:Original B1:Average C1:Bin D1:Random E1:Histogram G1:Histogram

3.

Enter the following data in the same worksheet

A2: 23 B2: A3: 25 B3: STDEV A4: 12 B4: A5: 24 A6: 27 A7: 57 A8: 45 A9: 19

4.

Enter the following formulas in the same worksheet

B2: =AVERAGE(A2:A9) B3: B4: =STDEV(A2:A9)
These formulas will generate the average (mean) and standard deviation of the
original data, respectively.

5.

Enter the following formulas to generate the bin range for the histogram
C2: =$B$2-3*$B4
This generates the lower limit of the bin range. This number represents three standard
deviations less than the average.
C3: =C2+$B$4
This formula adds one standard deviation to the number calculated in the cell above.

By Ranjita Brahma

Bell Curve Appraisal

6.

Select Cell C3, grab the fill handle, and then fill the formula down from cell C3 to cell
C8.

7.

To generate the random data that will form the basis for the bell curve, follow these
steps
a. On the Tools menu, click Data Analysis.
b. In the Analysis Tools box, click Random Number Generation, and then click OK.
c. In the Number of Variables box, type 1.
d. In the Number of Random Numbers box, type 2000.
NOTE : Varying this number will increase or decrease the accuracy of the bell
curve.
e. In the Distribution box, select Normal.
f.

In the Parameters pane, enter the number calculated in cell B2 (29 in the
example) in the Mean box.

g. In the Standard Deviation box enter the number calculated in cell B4 (14.68722).
h. Leave the Random Seed box blank.
i.

In the Output Options pane, click Output Range.

j.

Type D2 in the Output Range box.

This will generate 2,000 random numbers that fit in a normal distribution.

k. Click OK.
8.

To create a histogram for the random data, follow these steps

a. On the Tools menu, click Data Analysis.
b. In the Analysis Tools box, select Histogram, and then click OK.
c. In the Input Range box, type D2:D2001.
d. In the Bin Range box, type C2:C8.
e. In the Output Options pane, click Output Range.
f.

Type E2 in the Output Range box.

g. Click OK.
9.

To create a histogram for the original data, follow these steps

a. On the Tools menu, click Data Analysis.
b. Click Histogram, and then click OK.

By Ranjita Brahma

Bell Curve Appraisal

c. In the Input Range box, type A2:A9.
d. In the Bin Range box, type C2:C8.
e. In the Output Options pane, click Output Range.
f.

Type G2 in the Output Range box.

g. Click OK.
10. Create labels for the legend in the chart by entering the following
E14: =G1&"-"&G2 E15: =E1&"-"&F2 E16: =G1&"-"&H2
11. Select the range of cells, E2:H10, on the worksheet.
12. On the Insert menu, click Chart.
13. Under Chart type, click XY (Scatter).
14. Under

Chart

sub-type,

in

the

middle

row,

click

the

chart

on

the

right.

NOTE : Just below these 5 sub-types, the description will say "Scatter with data points
connected by smoothed lines without markers."
15. Click Next.
16. Click the Series tab.
17. In the Name box, delete the cell reference, and then select cell E15.
18. In the X Values box, delete the range reference, and then select the range E3:E10.
19. In the Y Values box, delete the range reference, and then select the range F3:F10.
20. Click Add to add another series.
21. Click the Name box, and then select cell E14.
22. Click the X Values box, and then select the range E3:E10.
23. In the Y Values box, delete the value that's there, and then select the range G3:G10.
24. Click Add to add another series.
25. Click the Name box, and then select cell E16.
26. Click the X Values box, and then select the range E3:E10.
27. Click the Y Values box, delete the value that's there, and then select the range
H3:H10.
28. Click Finish.
The chart will have two curved series and a flat series along the x-axis.

By Ranjita Brahma

Bell Curve Appraisal

29. Double-click the second series; it should be labeled "- Bin" in the legend.
30. In the Format Data Series dialog box, click the Axis tab.
31. Click Secondary Axis, and then click OK.
You now have a chart that compares a given data set to a bell curve.

By Ranjita Brahma