The forced distribution curve is often used to help managers identify high-performing employees and those who may need improvement.
The curve takes the shape of a bell, with most employees falling in the middle range, and fewer employees on the right and left of the curve. Rating categories are usually 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 a 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 ten others did not meet expectations. Jack Welch believes that the forced distribution curve is an effective way to identify and reward high-performing employees, as well as improve low performers. However, this approach has been criticized for creating a competitive and harsh work environment, leading some organizations to abandon it.
Importance of the Forced Distribution Curve:
Forced distribution curves are a performance management tool used to evaluate and rank employees based on their performance. The importance of using forced distribution curves can be summarized as follows:
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- Objectivity: Forced distribution curves provide an objective method for evaluating employee performance, as the curve relies on pre-determined percentages, meaning 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 scores or low ratings. This helps eliminate bias and discrimination in the evaluation process.
- Identifying top performers: Forced distribution curves help identify the best 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 low-performing employees within the organization. This information can be used to provide these employees with additional training and support, or in some cases, 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 objectives by identifying areas that need improvement and providing a framework for addressing these issues.
- Improved decision-making: Forced distribution curves provide managers with data-driven insights into employee performance, which can be used to make informed decisions about promotions and other rewards.
Key studies and statistics on the use and application of the Forced Distribution Curve:
- A study conducted by the University of Michigan indicated that the forced distribution curve can improve overall organizational performance by identifying and rewarding top performers while encouraging low performers to improve or leave the organization. However, this study also noted that the forced distribution curve can lead to decreased job satisfaction among employees who are consistently ranked in the lower levels.
- Another study published in the Journal of Applied Psychology suggests that the forced distribution curve can lead to biased ratings and unfair treatment of employees. This study proposed that managers are more likely to evaluate employees based on personal biases rather than objective performance criteria when using this curve.
- According to a survey conducted by the Corporate Executive Board (now part of Gartner), a global company providing best practice research, benchmarks, 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 conducted by Harvard Business Review, it was found that only 20% of employees ranked under the forced distribution curve reported that the curve was good and accurately reflected their performance. The study also found that forced distribution is used by 12% of companies in the United States and 16% globally.
- A study conducted by The Society for Human Resource Management found that only 8% of HR professionals believe that the forced distribution curve is an effective way to evaluate employee performance.
- A 2017 study by Mercer indicated that 44% of organizations using the forced distribution curve reported numerous negative effects on employee morale and engagement.
- In a case study conducted by Accenture, it was found that some organizations abandoned their forced distribution curve after discovering that it was causing high employee turnover rates and decreased employee satisfaction.
- The use of the forced distribution curve has been banned in some countries, including Brazil and regions in Canada, due to concerns about its ineffectiveness.
- According to a survey conducted 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 can lead to increased turnover among high-performing employees who feel underappreciated and undervalued.
Conclusion: It is important for organizations to carefully consider the potential benefits and challenges of this method before implementing it in their performance management systems, as it can have negative effects on employee morale in the work environment. While some organizations continue to use the forced distribution curve as part of their performance management system to help them identify best performance and areas for improvement, ensuring that decisions related to rewards and promotions are based on data and not arbitrary or biased.