What, The Bell Curve Lives?

Dan Carusi Dan Carusi, Driving Productivity, Employee Coaching, T+D, Talent Strategy

Just when I thought the performance ratings and the dreaded bell curve were dead, the Washington Business Journal announced that a major government contractor in Washington, DC is doubling down on the bell curve.  But wait a minute; this is not just your typical bell curve, but a new extreme level for assigning managers’ performance quotas.

The new rating system looks like this:

  • 1-Exceeds expectations: 15 percent
  • 2-Meets expectations: 45 percent
  • 3-Partially meets expectations: 30 percent
  • 4-Does not meet expectations: 10 percent

The Washington Business Journal also goes on to say, based on a memo obtained from the company implementing this, those who receive a “1” rating and were considered top performers will receive a merit increase.  So, I guess better luck next year or let me show you the door to the competitors, for the other 85% of the employee population.

Basically this rating system is saying that 40 percent of the workforce sucks and 30 percent are average. Good thing they have the remaining 15% to do all the work and to receive the pay raises, bonuses and promotions.  I’m all for weeding out the under-performers in an organization for many reasons, but with such a high percentage of employees receiving re-determined ratings below the line, I have to believe some top talent will be causalities of war.

From reading the article, it sounds like the goal is to raise the performance bar in order to build a high-performance, results-driven workforce.  This is a goal many organizations strive for, but what happens when some of the top performing talent do not make it into the 15% “Exceeds” bucket?  I think we all know the answer: They take their talents elsewhere and in the government contractor business, it is usually to a competitor.  The last thing you want to do in the middle of a war for talent is give your company a self-inflicted wound.  No doubt you will run the risk of attrition of top talent, which will put pressure on the acquisition of new talent in a very competitive market.  They most likely will back-up from being a results-driven workforce long before achieving that goal, and in a current tough market, the result is a loss of real dollars and negative impact on shareholder value.

I’m curious as to how this company plans to execute on the performance rating process?  And how will they identify the 15% of top performers?  In my experience, it comes down to the manager who can pitch his employee the best or win a couple rounds of rock, paper, scissor.  Either way, top talent will be pushed down to a lower rating… killing their motivation, engagement, productivity and loyalty to the employer.

There are other ways to create a high-performance culture within an organization beyond an extreme rating system.  Start with a “Play To Win” corporate value system that rallies employees around success. Recognition programs reinforce the right behaviors and help drive positive results. Talent review programs identify the top talent and the competencies and skills they exhibit as top performers.  Provide meaningful work as well as development opportunities for talent to grow both professionally and personally. And yes, cut the dead wood.  Help the under-performers move on to your competition but don’t let your top talent go with them.

The debate around performance ratings and bell curves is not over and will continue well into the future.  Many companies will continue to attempt to build a better mouse trap and develop performance management programs that will give them their intended desired outcome.  However, when doing so, stop and ask yourself this question: “Will rating the majority of employees as average to under-performers and not provide merit increases, bonuses or promotions create the high-performance organization needed to execute on the long term business strategy, deliver shareholder value and beat the competition?”  If the answer is yes, than let me recommend a two-level rating system: 1-you are awesome and 2-you suck.