Thursday, July 30, 2015

The mislaBELLed Curve

Disclaimer: The logical loopholes, the intellectual immaturity and grammatical errors in arguments put forth in the below mentioned post are sincerely regretted.




'A difference which makes no difference is no difference' - William James 
Harvard Professor and Father of American psychology

           Assume that you are the leader of the most successful thief gang operating in G City. Every night you will deliver an inspirational speech to your thieves so that they can go and give their best on field to steal the best of fortunes from the people of G City. The team of thieves comprising various experts in the field of robbery will start at midnight, finish their noble work with the utmost perfection and assemble back at the headquarters in the morning with the proceeds of the robbery. As the leader of the gang it is your everyday duty to distribute the proceeds to various thieves of your team as a reward to their hard work last night.

            Since it is dark when the team is actually performing their work of robbery combined with the fact that you have poor vision, you had stopped tracking the efforts or inputs of your thieves long back and started judging the performance of your thieves only based on the results. Till yesterday you were assessing the performance of your thieves based on bell curve methodology i.e you were force fitting your gang members in a 3 point rating scale of 1 to 3 with 1 being the best, 2 being average and 3 being the lowest and subsequently they were rewarded accordingly. Since there was huge backlash against the Bell Curve system in the recent times, you had conducted a focus group discussion amongst your thieves and the following insights were derived out of the discussion.
  • Bell curve segregates our thieves as top thieves, average thieves and poor thieves with the majority being rated as average thieves which causes disappointment amongst majority of our thieves and leaves them disengaged - Disengagement of the major population
  • Since the majority of our thieves are disengaged after the appraisal process, they will feel less motivated to give their best while doing robbery the next night which will decrease the overall size of the proceeds pie the next day - Decreased productivity and profitability
  • Since robbery is a team game, the segregation of employees into different cohorts increases envy and jealousy amongst the team members - Poor collaboration
  • If this trend continues then we will be facing higher attrition of our thieves to the competitor gang which had started embracing the new performance system which gives instant feedback about the performance of a thief in the last night robbery and hence helps him to shape himself as a holistic thief - Higher attrition
  • Since majority of our rival gangs have started to move away from bell curve we will be losing our relevance as a Thief Gang of choice to the top talent which would like to enter the robbery industry especially the forever finicky and over pampered millennials. Hence in order to establish ourselves as a advanced and forward looking thief gang we should dump the bell curve and move on to advanced appraisal systems-  Impacting the  employer brand 
You have done your homework on the pros and cons of the topic at hand and now as the visionary leader of the most remarkable thief gang of the G City you stand on the stage to address your fellow thieves.

       "My dear fellow thieves, our journey to become the best thief gang of G City had started 20 years back and we always stood by our most fundamental belief that our thieves are the most valuable resources of our thief gang. We are forever focused on enhancing our people capabilities and over the years we have adapted to several changes in our ecosystem by bringing in the best thieves and best people practices much faster than our rival gangs. Our stellar performance track record in robbery all these years stands testimony to the fact that we are the best thief gang in G City"

      "Now we are at the crossroads our journey as the successful thief gang. Till date we have assessed our thieves everyday on relative performance using the Bell Curve methodology. Since many of our rival thief gangs are starting to move away from the bell curve methodology to assess performance I realize the urgency in each one of your eyes to not lag behind our rival gangs in adapting new ideas. I have gone through the insights derived out of the Focus Group discussion and also read about the appreciation which our rival gangs are receiving from the robbery industry thought leaders for moving away from the Bell Curve. We need to make a choice now. The choice which we are going to make is going to determine the future our thief gang since the performance management system is not just a people practice but the DNA of our competitiveness as a thief gang. Let me put forth my view points on this issue post which we will decide on our choice"

1.Our love for comparison- Our human brains are designed to understand the value of things not in absolute terms but only in relative terms. Hence relative comparison is the basic fabric of our society which is motivated by materialistic things. Just think about our salaries as an example. Does any one concretely tell me how much they should actually be paid based on how much work he does ? No. We initially decide on how much we should be paid by analyzing how much our peers are paid and later go on to analyze how much the industry is paying for the same kind of work before we decide on the actual number. It is a natural human tendency to be curious to know how he is doing relative to others rather than how he actually does. Hence absolute assessment is cumbersome when compared with relative assessment.

2.Survival or Disengagement - The industrial dynamics had changed completely over the years and every gang is now under pressure to deliver superior value to their investors. Its about the survival of the fittest, and our fitness comes from being more competitive. Rewarding the best and punishing the worst is the fundamental principle to enhance competitiveness. Yes, few members will be left disengaged and few members may even be asked to leave the gang. Every gang is a unit of economic activity to deliver economic surplus and not a unit of charity. If we need to choose between our survival or disengagement of few members we know the obvious choice.

3. The Invisible Hand promotes productivity - Let us validate the next insight that Bell curve is decreasing collaboration between members and hence shrinks the overall size of the pie. Is that really true ? Number one - When individuals try to maximize their own good, it is the gang which benefits overall and hence it improves the overall well being of the gang. Number two - Any best member will always be aware of the fact that his competitiveness stems from his collaboration skills and people with the collaboration skills also become the best. It acts in both ways.

4. We don't actually force fit - If you are under the presumption that the proportion of employees who get each rating from 1 to 3 is always kept constant it is not so. As the performance of the gang varies every day, we also kept changing the proportion of rating. For example, in a moderate day we follow this pattern 1-25%, 2-50% and 3-25%. In an extraordinary day we have tweaked our proportions to boost competitiveness with 1-40%, 2-40% and 3-20%. There are some superlative days when we give the bottom rating to only very few members whom he had lost hope. We do not force fit and we have always tweaked the proportion of ratings based on the performance of the gang. But differentiation is the integral part since it is the one which makes all the difference when it comes to competitiveness.

5. There is no universal bell curve - Performance delivered is dependent on two important factors i.e the individual and the environment. If you are under the assumption that there is some universal bell curve under which all the members are ranked not taking the environment into consideration it is not so. Members are always grouped into similar cohorts which has a similar environment and only then the ranking is done to measure precisely the impact of the individual alone.

6. Whats next ? - Yes. We accept the fact that the bell curve methodology has some flaws. Most of the people who are embracing the new systems are doing so not because of the actual merits they foresee in the new systems but because of the discontent they had with the Bell Curve methodology. Is the new system which is going to replace the Bell Curve will be flawless or whether it will lead to holistic performance of the individual is yet to be realized. Systems and practices are as good as they are in actual implementation.

I leave the choice in your hands whether to live with the known devil or unknown angel. But we need to keep in mind the fact when it comes to people practices there are no perfect systems which will keep every party happy and rejoicing. 

Life is never black or white.. It is actually 1000 shades of grey..

Regards,

Ramesh Moorthy

4 comments:

  1. I agree to the fact that average raters would have disconnect and feel less engaged at workplace. However this happens when the person is not convinced about the rating he/she received or the leader has failed to justify reasons for avg. rating with real work situations and examples from past experience with the person. It is also a fact that resources are limited and organizations cannot take a socialist approach on rewards. The top rated would surely be more enthusiastic in work and put in his/her best. I think organization should follow a more relaxed but rule based curve. I have also read about business models where every employee is a partner and the CEO and the worker earns the same rewards. Such models are fantastic as long as scale of business is limited and people are open to continue and respect job roles assigned. Here thrill would be in getting incremental business with collective effort, but if one person (just one person) disagrees to the idea the whole system collapses.

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  2. Liked ur crispness and anology ����

    Agree to disagree on bell curves's efficacies ..

    Talent development and resourse optimisation models can be game changers for any organisation , is not a simple excercise , we are avoiding its intricacies with simpler approaches of bell curve due to our perceived abundance of resources !!

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  3. Bell curve is obviously a tried and tested system.. The trick to enhancing engagement lay in making
    1. Performance measure more quantitative, there by reduce subjectivity as much as possible.
    2. Bell curve percentages fixed more on the basis of SBU performance (particularly in big companies). Which I believe will bring a higher level of acceptance as each employee in an SBU can relate to their SBU performance more.

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