A new policy at Yahoo sees managers ranking their employees on a bell curve and terminating those at the low end.
Bell curve rankings became popular in the 1980s, but have declined recently. ANZ abandoned bell curve rankings in March of this year, amidst a growing understanding within HR circles of not only its unpopularity with staff, but the disadvantage it provides to organisations where all have achieved strong performance.
The constant pressure of a bell curve ranking was found to demoralise staff, the Massachusetts Institute of Technology report, Punishing by Rewards: When the Performance Bell-curve Stops Working For You, revealed.
Although a certain degree of pressure can help motivate a workforce, bell curve rankings are apocalyptic in nature: the report found that, over time, the employee base is thinned out through the culling of staff on the low end of the curve.
With every review, more staff – even those performing well – will be terminated, as the bell curve will always place some in the lower portion. Effectively, once all under-performing staff are eliminated, average staff will begin to be, as well.
“As the company shrinks, the rigid distribution of the bell-curve forces managers to label a high performer as a mediocre,” the report stated. “A high performer, unmotivated by such artificial demotion, behaves like a mediocre.”
Does your organisation use bell curve rankings? If so, tell us how it works and whether you would recommend it to others.