4/12/2023 0 Comments Bell curve squeed![]() ![]() Think about how people perform in creative, service, and intellectual property businesses (where all businesses are going). If you think about your own work experience you'll probably agree that this makes sense. (Bill Gates used to say that there were a handful of people at Microsoft who "made" the company and if they left there would be no Microsoft.) In fact the implication is that comparing to "average" isn't very useful at all, because the small number of people who are "hyper-performers" accommodate for a very high percentage of the total business value. So the concept of "average" becomes meaningless. Roughly 10-15% of the population are above the average (often far above the average), a large population are slightly below average, and a small group are far below average. In the Power Curve most people fall below the mean (slightly). ![]() It has very different characteristics from the Bell Curve. Rather these groups fall into what is called a " Power Law" distribution.Ī "Power Law" distribution is also known as a "long tail." It indicates that people are not "normally distributed." In this statistical model there are a small number of people who are "hyper high performers," a broad swath of people who are "good performers" and a smaller number of people who are "low performers." It essentially accounts for a much wider variation in performance among the sample. found that performance in 94 percent of these groups did not follow a normal distribution. and Herman Aguinis (633,263 researchers, entertainers, politicians, and athletes in a total of 198 samples). Research conducted in 20 by Ernest O’Boyle Jr. Third, most of the people are always in the middle - rated more or less "average." And implicit in this last assumption is the idea that most of the money and rewards go to the middle of the curve.(The "idea" behind this is that we'll continuously improve by lopping off the bottom.) So if your team is all high performers, someone is still at the bottom. Second, we force the bottom 10% to get a low rating, creating "losers" in the group.First, we ration the number of "high performance ratings." If you use a five point scale (similar to grades), many companies say that "no more than 10% of the population gets a rating of 1" and "10% of the population must be rated a 5.".This practice creates the following outcomes: To avoid "grade inflation" companies force managers to have a certain percentage at the top, certain percentage at the bottom, and a large swath in the middle. HRs can easily meet their goal of doing performance appraisals without any major change in existing software.In the area of performance management, this curve results in what we call "rank and yank." We force the company to distribute raises and performance ratings by this curve (which essentially assumes that real performance is distributed this way).It is effective and works in most situations.It is common for a number of reasons such as: It is not a good fit for small companies.It looks down upon employees as mere data points and thus results in loss of morale.Proper allocation of training needs for each employee can be identified.The suitability of the employee for a particular job position can be identified.It helps easily identify top performing employees.What are some advantages of bell curve?.It is an insensitive approach that ranks the employees. This is because in small firms which have less data, the curve cannot be done properly, and the results are mostly skewed.īell curve is also considered bad on occasions when even though the employee does not fit into the curve, they have to. It is particularly useful for large to very large companies since they have a lot of data to derive insight from, whereas for a small company with about 300 or fewer employees, it is not very helpful. Up to 99.7% of the data is within three standard deviations of the mean.īell curve is both good and bad based on different situations.Approximately 95% of all the data is within two standard deviations of the mean.About 68% of all the data lies within one standard deviation of the mean.The bell curve rule also knows as the 68 95 99 rule implies the following: The peak of the bell curve depicts the mean, median, and mode of a certain set of data. In the HR domain, they are a tool to measure employee performance and for performance appraisal. Bell curves are normal curves that are important to identify financial and economic trends and are widely used to draw a variety of statistics. ![]()
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