HR SPECIAL........................ Axe the Bell Curve

Axe the Bell Curve





How the likes of Microsoft and Cisco bid goodbye to the much hated appraisal tool

When Microsoft announced that it was doing away with bell curve system of appraisals in October 2013, there was a wave of euphoria across the organisation. After all, the bell curve has been held responsible for killing innovation and teamwork at Microsoft and fostering a bureaucratic, political culture that undercut its ability to compete. A 2012 article titled Microsoft's Lost Decade in Vanity Fair by Kurt Eichenwald described how the company's superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings: “Microsoft employees not only tried to do a good job but also worked hard to make sure their colleagues did not.“

Such damaging reportage notwithstanding, no one quite expected the company to ditch the bell curve in one go. When it happened, it came as a pleasant surprise to employees across the world, including the 6500 people in Microsoft India. “The initial reaction was “thank god!“ but that was followed by uncertainty, as people started wondering how they would now be measured,“ says Microsoft India chairman Bhaskar Pramanik. “My generation of engineers has been used to stack rankings since our IIT days. But what worked in the past won't necessarily work in the future. Hence the decision to drop the bell curve.“

The relative grading system in engineering schools is based on the principle that the marks scored by the students in any test will follow a bell curve. The mean score may be high or low depending on the difficulty of the test, but there will be a standard deviation, with a small cluster of students with scores markedly higher than the mean and a cluster far lower than the mean. It's a system that works well in exams, which are individual focused, but it has its limitations in an organisational setting, where teamwork is involved. “Today, a person is appraised not just on individual impact, but on teamwork,“ says Pramanik.“To succeed, you have to be smart, you have to be collaborative and you have to develop yourself based on feedback.“

The main feature of Microsoft's new system is the stress it lays on continuous feedback. The appraiser and appraisee are required to do at least four “connects“ every year, where the discussion is around what was achieved in the past quarter, what is planned in the next quarter and what could have been done better. “The discussion is both on what has been achieved as well as how it has been achieved,“ says Microsoft India Human Resources head Rohit Thakur. “For example, one of the issues discussed is how you have reached out and helped others. It's helping people get a sense of what success looks like.“

Before Microsoft, Thakur spent 12 years with GE, the original champion of the bell curve. Today, he's responsible for eliminating all the vocabulary associated with the concept. “We no longer label a person as “star“ or “non-performer.“ Every indi vidual has bad years and good years. The key measure now is impact. That's the basis on which everyone is rewarded.“ he says.t One of the problems with the bell curve system is the direct link it creates between its five categories and salary hikes. At Microsoft, salary hikes are now left to team managers, who must take a call on how to distribute the sum budgeted to them. A manager can divide this equally amongst his team, but most would recognize this to be a recipe for disaster in the long run. The managers know they need to differentiate and ensure higher rewards to those who have greater impact. Else they will be left with a low performing team.

Compare this to the earlier process described in Microsoft's Lost Decade, where managers would gather in one room during appraisal time to haggle over where their people should be put in the department's bell curve. Microsoft engineers who were clued in understood it was not just enough to impress their own boss, but bosses of other teams as well, which meant making time to “schmooze as many managers as possible.“ Rajiv Kaul, now vice chairman of CMS Info Systems, was Microsoft India's first country head. He says: “The bell curve appraisal is an unnecessarily aggressive American inven tion that damages human relationships. In large organisations, politics takes over. I've seen how it worked, so I never used it in CMS.“

Another large organisation to recently axe the bell curve is Cisco, which announced the decision in November 2014. Since then, Seema Nair, Director of HR, has been busy training the 900 managers who ap praise Cisco India's 10,000 employ ees on the nuances of the new system, which are in many ways simi lar to Microsoft's. “Abandoning the bell curve is a bold move and it sent shock waves through the organisation,“ she says.“The senior leaders intuitively get it and they're the early adopters. But there will be some resistance down the ranks, as there is with any major change.“

Nair's biggest challenge is to get the quar terly `sync up' conversations between appraisers and appraisees running smoothly (similar to Microsoft's `Connect'). The bell curve system also mandated open conversations, but they never actually happened.“In a ranking system, employees would just be interested in knowing their rank. They would tune out to the rest,“ says Nair.

This disinterest in feedback has always been a characteristic of the Indian workplace and bell curve appraisals have failed to address the problem. The new appraisal systems being implemented by Microsoft and Cisco are taking the issue of feedback head on. “Indian managers are hesitant to give feedback to their employ ees because they're afraid of confrontation,“ says Mohinish Sinha, head of leadership and talent practice at Hay Group.

“While appraising their peo ple, managers tend to focus on results rather than how the results were achieved. So you end up celebrating bad behaviour.“

The Hay Group has been advising several clients inter ested in moving away from bell curve appraisals, but none of them have yet taken the plunge. “They're flirting with the idea but they're afraid of where it will take them. It's basically a change management issue. We tell them to take courage,“ says Sinha.

By Dibeyendu Ganguly CDET29MAY15