In 2012, Microsoft CEO Steve Ballmer gave what the company stated would be their final key note at the International Consumer Electronics Show. The keynote, for lack of substance, came in for prodigious flak from the media, which called it a ‘cruel joke’. Vanity Fair wrote a scathing piece about how Microsoft had killed innovation and rewarded mediocrity, pundits claimed.

In October the following year, Microsoft declared it would do away with the bell curve appraisal system, probably in response to article. It was applauded across the organization. Corporate behemoths like CISCO, TCS, IBM, and Accenture followed suit. Their Management replaced the Bell Curve with appraisals based on individual performance, which would be more regular than quarterly or annual. How ever, this hasn’t led to a substantial improvement in the appraisal system. Data for the last three years doesn't show anything phenomenal from any of these companies.

The Bell Curve is applicable in everywhere - in team performance, business growth and more. Try this. Draw a graph to plot the performance of your company. You’ll find that the top quartile comprises of 20 percent employees, 70 percent employees are average and 10 percent are non-performers. Even the new product adoption cycle - innovators, early adopters etc. - form a neat bell curve.

Organizations which focus on performance attest to performance appraisal on the basis of outcomes. The Bell Curve:

1. Rewards top performing employees and motivates them to achieve business goals

2. Encourages mediocre performers to work harder and climb into the next bracket
3. Identifies low performers, and creates a correctional program to guide them to get back on track.

Why then, are companies doing away with it?

The primary reason is that business leaders may change processes, but continue ignoring essential metrics. Vanity Fair stated – “Microsoft employees not only tried to do a good job but also worked hard to make sure their colleagues did not”. Why hold an effective theory responsible for human blunders?

Feedback should never be compromised in the first place, regardless of whether the bell curve performance appraisal system is implemented or not

I’ll share a personal example. A business approached me stating that they wanted to replace the Bell Curve performance appraisal with something sophisticated. Their reason? Sales were good, but they found it tough to stay afloat. This was a paradox. So we looked into their balance sheets. Their challenge wasn’t sales, but revenue. The company’s definition of sales was when purchase orders were raised. It didn’t concern it self with revenue collection and other important metrics. Thus, sales personnel relaxed after submitting a purchase order. On paper, the company was making money. But an obscenely large amount of revenue lay uncollected over years. The management held more meetings with every team, and provided regular feedback. But nobody discussed the glaring issue of defaulters and uncollected payments.

How can we blame the bell curve for this gross oversight?

Executives and managers justify this by saying they’re now more time providing feedback to subordinates. That’s a good sign. But feedback should never have been compromised in the first place, regardless of whether the bell curve performance appraisal system was implemented or not. Like many fads, abandoning the bell curve will also be a passing phase. As time passes, businesses will observe that despite more feedback, the bell curve still holds true. In fact, with consistent feedback (once a quarter instead of once a year), they’ll notice a substantial improvement in organizational performance.

Thus, I believe the Bell Curve appraisal system will return soon - either under the same name or repackaged as some thing new. Or, it might get abandoned altogether in favor of a system more effective - one which we don't know yet. I might be proven right, or pleasantly wrong. Only time will tell. What are your thoughts?