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Forced Distribution Curve, Does It Enhance the Effectiveness of Employee Performance Evaluation?

The Forced Distribution Curve is a performance management tool widely used in organizations to assess employee performance. This approach was innovated by Jack Welch, the CEO of General Electric, in the 1980s and 1990s.

12 Dhu al-Qi'dah 1444, corresponding to June 1, 2023

The Forced Distribution Curve is often utilized to assist managers in identifying high-performing employees and those who may need improvement.
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the curve takes the form of a bell, where most employees fall within the average range, with fewer employees on both the right and left sides of the curve. Evaluation categories are typically divided into three to five groups, such as (Significantly Exceeds Expectations, Partially Exceeds Expectations, Meets Expectations, Does Not Meet Expectations).
For example, if an organization has one hundred employees, the Forced Distribution Curve might require classifying 10% of employees as high performers, 80% as average performers, and 10% as low performers. This means that ten employees exceeded expectations, and another ten did not meet expectations. Jack Welch believes that the Forced Distribution Curve is an effective way to identify high-performing employees, reward them, and improve the performance of those with low performance. However, this approach has been criticized for creating a competitive and harsh work environment, leading some organizations to abandon it.

Importance of Forced Distribution Curve:

Forced Distribution Curves are a performance management tool used to assess and rank employees based on their performance. The importance of using Forced Distribution Curves can be summarized as follows:

    • Objectivity: Forced Distribution Curves provide an objective method for evaluating employee performance because the curve relies on pre-determined percentage ratios. This means that managers cannot arbitrarily assign ratings to employees.
    • Fairness: Forced Distribution Curves ensure fairness in the evaluation process by preventing managers from giving all employees high or low ratings. This helps eliminate bias and discrimination in the assessment process.
    • Identifying Top Performers: Forced Distribution Curves help identify top performers within the organization. This information can be used to reward high-performing employees, provide them with opportunities for growth and development, and retain them within the organization.
    • Identifying Low Performers: Forced Distribution Curves also help identify employees with low performance within the organization. This information can be used to provide these employees with additional training and support or, in some cases, to terminate their employment.
    • Consistency: Forced Distribution Curves ensure consistency in the evaluation process across different departments and managers within the organization.
    • Alignment with Organizational Goals: Forced Distribution Curves help align employee performance with organizational goals by identifying areas that need improvement and providing a framework for addressing these issues.
    • Improving Decision-Making: Forced Distribution Curves provide managers with data-driven insights into employee performance, which can be used to make informed decisions regarding promotions and other rewards.

Prominent Studies and Statistics on the Use and Application of Forced Distribution Curve:

  • One study conducted by the University of Michigan suggested that the Forced Distribution Curve could enhance overall organizational performance by identifying and rewarding high performers while encouraging low performers to either improve or leave the organization. However, this study also indicated that the Forced Distribution Curve might lead to decreased job satisfaction among employees consistently classified in the lower levels.
  • Another study published in the Journal of Applied Psychology indicated that the Forced Distribution Curve could result in biased rankings and unfair treatment of employees. This study proposed that managers are more likely to assess employees based on personal biases rather than objective performance criteria when using this curve.
  • According to a survey by the Corporate Executive Board (now part of Gartner), a global company providing research best practices and decision support tools for business leaders, 30% of companies in the United States use the Forced Distribution Curve as part of their performance management system.
  • In another study by Harvard Business Review, it was found that only 20% of employees rated under the Forced Distribution Curve believed it accurately reflected their performance. Moreover, the Forced Distribution Curve was used by 12% of companies in the United States and 16% globally.
  • A study conducted by the Society for Human Resource Management revealed that only 8% of HR professionals believe that the Forced Distribution Curve is an effective method for evaluating employee performance.
  • A 2017 study by Mercer found that 44% of organizations using the Forced Distribution Curve reported multiple negative impacts on employee morale and engagement.
  • In a case study conducted by Accenture, some organizations abandoned their Forced Distribution Curve after finding that it led to increased turnover rates and decreased employee engagement.
  • The use of the Forced Distribution Curve is banned in some countries, including Brazil and certain regions in Canada, due to concerns about its effectiveness
  • According to a survey by WorldatWork, 26% of organizations use the Forced Distribution Curve as a primary method for evaluating employee performance.
  • A study published in the Journal of Applied Psychology found that Forced Distribution could lead to an increase in turnover rates among high-performing employees who feel diminished appreciation and recognition.

Conclusion: It is important for organizations to carefully examine the benefits and potential challenges of this method before implementing it in their performance management systems. This is because it can have negative effects on employee morale in the work environment. While some institutions continue to use the Forced Distribution Curve as part of their performance management system to help identify top performers and areas for improvement, it is essential to ensure that decisions related to rewards and promotions are based on data and are not arbitrary or biased.

References:

  • 1. Cascio, W. F., & Aguinis, H. (2008). Research in personnel and human resources management: Forced distribution rating systems. Emerald Group Publishing Limited.
  • 2. Murphy, K. R., & Cleveland, J. N. (1995). Understanding performance appraisal: Social, organizational, and goal-based perspectives. Sage Publications.
  • 3. Tornow, W.W. (1993). Performance appraisal: Theory into practice. Sage Publications.
  • 4.Van Velsor, E.& Leslie, J.B. (1995). Why 360-degree feedback goes awry. Harvard Business Review.
  • 5. https://www.emerald.com/insight/content/doi/10.1108/IJPPM-06-2017-0141/full/html
  • 6. https://worldatwork.org/resources/publications/workspan
  • 7.https://web.archive.org/web/20061016230407/
    8. http://www.cefcorp.com/commequip/productsandservices/acfc/VitalityCurve.asp

Eng. Amr Haroun

Senior Consultant

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