Infosys Scraps Bell Curve for Performance Evaluation
Vishal Sikka, CEO of Infosys announced that Infosys has stopped using the bell curve phenomenon which is used to evaluate its 176,000 employees' performance. Richard Lobo, senior vice president of Human Resources department at Infosys, told The Economic Times about this announcement:
From this quarter, we have removed the forced ranking and in the October appraisal, employees will be appraised on the open ranking. From now on, the managers will take a call and reward," Richard Lobo, senior vice president.
According to the white paper published by Massachusetts Institute of Technology on Punishing by Rewards, many organizations today use a bell-curve for performance evaluation process. They reward a small percentage of top performers, encourage a large majority in the middle to improve, and lay-off the bottom performers. Authors of the white paper shared their views on bell curve as follows:
We observe that pressure, if maintained below a certain level, can lead to higher performance. However, with lay-offs, constant pressure demoralizes employees, leading to drop in performance. As the company shrinks, the rigid distribution of bell-curve forces managers to label a high performer as a mediocre. A high performer, unmotivated by such artificial demotion, behaves like a mediocre. Further, managers begin to reward visible performance over the actual. Finally, the erosion of social capital could cripple the company.
According to Lobo this new move is showing some positive impact on the company's attrition rate:
Attrition is now close to 13 per cent. One of the big reasons for this (attrition) to come down is because we consciously got rid of the bell curve. The new system will be more open and flexible with a pronounced focus on rewards for performance.
Cisco, has decided to discard the bell curve methodology to evaluate employees and replace it with a new feedback mechanism. This announcement was made by Francine Katsoudas, Chief Human Resources officer at Cisco at IndiaTimes.
From an employee's perspective, it's the most hated process that you have. Even leaders are saying they are not getting what they want from the system. And so, the decision that we have made, which given our scale is a very big decision, is that we're going to move away from ratings. And we're going to move away from the concept of the annual review.
According to Francine, Cisco now expects its managers to have four informal discussions with each subordinate through the year.
Instead of writing perhaps two pages assessing your employee at the end of the year, we're going to say, have a quarterly conversation, find out how they're doing, give them the feedback on what's going on, ensure that they are aligned to what's most important, and have the conversation about when they're going to be ready to move onto something else and you prepare them for that.