IMT GHAZIABAD

Finding an alternative to Bell Curve System

of Performance Management

Arjun Modi (180103047)

Divyansh Singh (180103078)
Keshav Singh Bhadoria (180101129)
Mounika Naikini (180103133)
Subhra Mishra (180103228)
Sreekumar Kavikkal (180103223)
Vatsal Sharma (180103252)

Human Resource Management

APO Project Report
 Executive Summary

The bell curve system of performance appraisal is used by many businesses across the world
to rate a workforce by comparing the performance within a team. Even though it’s one of
the most popular system of performance appraisal, businesses in the past two years are
increasingly looking for other alternatives.

In this project, a primary data collection was conducted among the senior level managers at
TCS to gain insight on their opinion about the bell curve system.

TCS was chosen because the firm shifted their performance appraisal system from bell curve
to the continuous feedback in the year 2016. Hence the managers who conducted the
appraisal will have a rich experience of both the worlds and be in a better position to
comment about their merits and demerits.
 Introduction

The bell curve system is one of the most popular appraisal methods in the world. It was
popularised by former CEO of General Electrics Mr.Jack Welch. This system rates the
employees by comparing performances of people in similar job profiles. They are then
separated into high, medium and low performers. However, more companies have been
looking into other ways to evaluate and monitor their employees. Bell Curve Method of
Performance Appraisal was used in TCS until 2016, after which they adopted the system of
continuous feedback.

Tata Consultancy Services:

Tata Consultancy Services Limited is an Indian MNC providing services in consulting and
information technology sector. Tata Group is it’s parent company and has operations in 46
countries. It’s company headquartered in Mumbai, Maharashtra.

TCS is one of the largest private sector employers in India having a total of 401,975
employees as of November 2018, of which 32% were women.
 Research problem

Is there an alternative to the bell curve?

Even though the bell curve method of performance appraisal has it’s own pros such as:

 Identifying the top performers and rewarding them substantially thus helping the
organization retain it’s best performers
 Giving managers the freedom to be lenient or strict in giving the ratings
 Identifying the suitability of employees in a particular job position

But, the cons outweigh the pros. Such as:

 This system might turn out to be too rigid in cases where the employee strength in
the organization is less

 The bell curve specifications and requirements might force the manager to put
employees in specific rating groupings.

 In the bell curve model, the managers can give only a limited number of employees
in the top performers category, employees who have actually performed exceedingly
well through the year might be forced to be categorised in the Average performers’
category for some valid Bell curve requirements

 Loss of morale among the employees due to above mentioned points

Hence, through this project, we are trying to find the best alternative to the bell curve
system of performance appraisal.
 Conceptual Model

Bell Curve Method of Performance Appraisal:

Bell curve system of performance appraisal is a forced ranking system imposed on the
employees by the management. Through this system, the organization tries to identify the
best, medium and worst performers and develop the best and remove the worst. And this
differentiation is based on relative comparison of the performance of the employees against
those engaged in same or similar activity and ranking them accordingly.

Continuous Method of Performance Appraisal:

On contrary to the annual appraisal systems, Continuous Method of Performance Appraisal

takes place throughout the year on an ongoing basis. This system involves setting and
achieving short term goals, regular one to one interviews and real time feedback.
 Research Methodology

A primary research was conducted where the questionnaire method of data collection was
used. Information was collected from Managerial level employees working in the Chennai
offices of TCS.
Also, Telephonic interview method was used according to the preference given by the
Managerial level employees.

Below is the set of questions that was prepared to be asked to Managerial Level Employees at TCS
regarding the Effectiveness of the Bell Curve System of Appraisal
1. Based on the experience in industry as well as in TCS what were the merits and demerits of
the bell curve?
1. What led to the paradigm shift from bell curve to Continuous feedback?
2. How fare was the evaluation system under the bell curve?
3. What was the impact on employee compensation, promotions, and incentives during the
bell curve system of appraisal?
4. How effective is the continuous feedback system as compared to bell curve system?
5. Is there any change in the bonus pay after the implementation of new system?
6. Has there been any visible change in the performance and competitiveness of employees?
7. Is the system uniform for both entry level and management level employees in terms of
salary hikes and incentives?
8. Based on your experience kindly suggest a better alternative to the bell curve system of
appraisal.
 Analysis and Findings

Below is the consolidated response we got from the account managers who responded to
the above questionnaire:

1. Based on the experience in industry as well as in TCS what were the merits and
demerits of the bell curve?
- Merit – A system that puts some discipline in ranking the associates within a team
- Demerit – It kind of punishes the associates that are ranked at the lower level. They
may be even much better than the middle ranked associates from another team, but
within the team, they are at the lowest level and hence may receive very bad bands
2. What led to the paradigm shift from bell curve to Continuous feedback?
- I am not sure about this. May be complaints and associates leaving the organization
due to receiving low bands
3. How fare was the evaluation system under the bell curve?
- Once the associates are rated based on the goals achieved, they are ranked within a
team. The bell curve pushes for a formula like 10% A, 30% B, 50% C and 10% D. Thus
the associates that are at the lower end within a team receives lower bands. An
associate receiving a C may be very close to the one ranked just above him(who
receives a B), but the bell curve pushes him for a C, which in fact has impact towards
his compensation and promotions
4. What was the impact on employee compensation, promotions, and incentives during
the bell curve system of appraisal?
- There is a variable component in the salary which varies based on the bands you
receive. Based on the level of experience, the difference in the salary can be of
considerable difference.
- An associate receiving the lowest band (D), will not be considered for promotion for
that year And at senior levels, you may not be considered for promotion if you don’t
get atleast second best band
5. How effective is the continuous feedback system as compared to bell curve system?
- I cannot answer this; I have not been an appraiser after this was implemented
6. Is there any change in the bonus pay after the implementation of new system?
- I dont think so
7. Has there been any visible change in the performance and competitiveness of
employees?
- Yes. With the new system employees cannot afford to be complacent after
successful implementation of one project.
8. Is the system uniform for both entry level and management level employees in terms
of salary hikes and incentives?
 - More or less the same
9. Based on your experience kindly suggest a better alternative to the bell curve system
of appraisal.
- Along with continuous feedback, Management by Objective can be implemented
where the employee along with their managers set targets/goals and follow up on
the goals through periodic feedback.

From the above mentioned research, it is clear that the employees, including the appraiser,
feels the bell curve system of appraisal is unfair and forced.
According to the primary research data shows that most of the sample population feels the
continuous feedback system is better than the bell curve system of appraisal because it’s
more fair towards the effort put in by the employees. They also feel that the continuous
feedback system is better since it levels the ground during appraisal across the various
accounts.

However, one of the managers suggested an integration of continuous feedback along with
management by objective would be more effective in gauging performance of the
workforce.
 Conclusion

Businesses have started abandoning annual performance reviews and replaced them with
continuous feedback. A mixture of both continuous feedback and management by objective
is a more balanced way to go forward. However, the overall process and its outcomes are
still being designed and redesigned by organizations as per their business and industry
realities.