Perf. Evals. - forced "normal distribution" legal?

mdonal01

We are in the midst of our annual performance evaluation process. My employer just sent a memo to all group leaders stating that they expect to see a "normal distribution" in the performance evaluation scores for our staff. They state that "Normal distribution is defined as: 15% = 1.0, 20% = 1.5, 40% = 2.0, 15% = 2.5, 10% = 3.0." On our scale 1 = exceeds expections, 2 = meets expections and 3 = does not meet expectations.

By definition, they are requiring us to rate 25% of our staff below "meets expectations." We have already been through layoffs and had a hiring freeze all year. Not only do I not have anyone who is performing poorly, but my staff is working harder than ever to pick up the work performed by those who were let go or have left the firm. How can they require me to rate any of my staff as underperforming?

In addition, they stated "Administrative groups that submit ratings that differ from the normal distribution curve will be required to justify the proposed difference and may be required to make modifications."

Another concern is that they will use this forced "natural distribution" to layoff additional staff, claim performance issues and not pay any sort of severance (which has been reduced to no more than a total of 4 weeks regardless of tenure).

Margaret Morford

While "normal distribution" may be legal on its face, if a protected class winds up being unduly effected by this rating scheme, you may need to worry about disparate impact. But much more important is the huge morale hit you will take. What incentative is there for me to work hard when I know that I will not be fairly rated on my performance? If you have mangers that are particularly good at hiring and developing managers, they are unduly penalized if they are forced to use "normal distribution" to rank those super stars they have developed. The converse is also true, if a manager has a group of particularly weak performers, he/she is forced to rank some higher than they deserve. Your management should be looking at things department by departmant and ensuring that managers aren't giving the same rating throughout the department, not using some forced ranking system. I suspect that your management has been won over by GE's success with this system. However, GE is a huge company and the bell curve usually holds true when applied to a significant number of employees. Even Jack Welch has said in his book, "Building self confidence in others is a huge part of leadership. It comes from providing opportunities and challenges for people to do things they never imagined they could do - rewarding them after each success in every way possible." Jack: Straight from the Gut (Page 5). What you management is contemplating absolutely goes against rewarding people for their successes and will kill the incentative for employees to excel. The good ones will leave because they cannot be recognized fairly for their efforts and the mediocre ones will stay because they are going to be ranked in the middle of the pack anyway.

You're welcome to call me about this. I hope I have helped you.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

sonny

We have this system as well and can only concur with what Margaret has said. People (especially supervisors) REALLY dislike it. Weakly, in its defense, I think what started it was an extraordinary # of high evaluations. Some of this goes back to the need to train supervisors in conducting good evaluations. .it is true that not everyone is a star and that there is nothing wrong with you if you are a "meets expectations" employee. Nonetheless, let me reiterate that it is universally disliked and I would not recommend it as a carved in stone policy. It can be successful used show supervisors how they are scoring.

Gar

Forced distributions can be tricky for the many reasons Margaret mentions. In another HR assignment about 9 years ago, we gave it a shot with our management employees prior to a lay off. Ours was relatively simple. The bottom 10% of the appraisal universe would get the ax. We had a base of 2000+ people. Low and behold, a significant number of women, people of color and older employees (40+) wound up on the bottom. We could explain why many women and people of color were adversely affected. They were our most recent hires/promotions due to affirmative action. As a result, many hadn't yet obtained (attained?) the level of job skill their white male peers had and this fact showed up in their evaluations. However, we couldn't readily explain, businesswise, the impact on older employees. Because the Civil Rights Act of 1991 makes it a lot easier for protected groups to prove their case statistically, we decided not to use that scheme but one which concentrated on who had the skills required to drive the business and who didn't have the skills.

Theresa Gegen TX

[font size="1" color="#FF0000"]LAST EDITED ON 11-15-01 AT 09:00AM (CST)[/font][p]While it is not illegal on its face, there is aleast one company (on of the big auto manufacturers) that got in trouble for using that type of system.
That was Ford Motor Company, that gave out A, B, and Cs. Five percent of the employees had to get Cs and those with Cs could not get raises or bonuses.
The system discriminated against various classes of people (older and minority). The system cause such an uproar among older and minority employees that the company got rid of it.

Another big problem with the system is putting percents to the "normal range". In most businesses 10% of the workforce is not working below expections. The vast majority of the workforce meets or exceeds, and those working below are weeded out (fired) all during the year (before review time). Another issue with these arbitrary numbers is that some of the work groups may be better than others (for example, one shift under one manager may be a desirable shift because of hours and attract the best employees). Under the company's system that manager will be forced to rank 10% of his or her employees below expectations, even though all of the employees may be above expectations under that manager.

Good Luck!!

JustAnEmployee

Several years ago I worked for a government contractor that used this system. I was appalled when I was told how I was to rate my employees. I had a small department of 11 people. After I turned in my ratings, my supervisor called me in and told me that my two star employees would both have to be downgraded and my two lowest rated employees would have to be moved up into their place. His reasoning was that the star performers had received the best ratings and the highest raises the previous year so it would not hurt them to miss out on a raise this year. The two lowest rated employees were below expectation performers who barely managed to avoid being fired for performance reasons that year. One was a minority and the other was an employee whose emotional problems created havoc in the workplace. HR was afraid that we'd be sued over their ratings, so I was told to either change the ratings as instructed or I would be fired. I'm sure you can image how difficult it was to conduct the face to face with these four employees. I was not allowed to tell my star performers the real reason why they got such poor ratings. Both of my stars left within two months after that. I lasted another month.

Rockie

I'm not one for manipulating figures to fit situations, especially in the area of pay and performance. Before I would want to downgrade star performers which is very counterproductive, I would more likely advocate doing just an across the board minimal increase for everyone if this is for budgetary reasons.

While I feel it is true that most employees would probably fall into a mid level increase which would mean they are meeting the objectives of their position and performing as they should in their jobs, there are those who are below performing levels and those that are above. At either end of this spectrum, there should be a only a few, identifiable ones. The low level performers should probably be weeded out and the higher performers, of course, should be rewarded with a higher than average increase. But to force people into catgories regardless of their performance is not the way to go and could, as stated by others, cause disparate impact on certain groups.

I would definitely rethink this type of appraisal.

Gar

I've had this pet performance/compensation theory in the back of my mind for a number of years. It seems to me that if you have a poor performer whom you rate as such, but give salary increases to that are similar to those of your better performers, you're potentially setting yourself up for a legal action when you fire him/her for performance. My theory is: "If, I'm such a lousy performer, why did you give me the hefty pay raises?"

TheCol

A good case of the mathematical cart trying to pull the workforce horse(s), if you'll forgive me. There is nothing good that comes of a forced ranking system with "Mandatory" either good (bonus) or bad (firing) outcomes. On the human side, the resultant is always a star getting laid off because of a bad intermediate supervisor and a jerk being rewarded. Equally compelling is the disparate impact of discrimination already mentioned. Dept of Defense tried this system for evaluation of its Army Officers and it didn't last long. How many ways can you say "don't"?