Many companies are implementing Forced Distribution — the practice of forcing a prescribed distribution of ratings during the performance review cycle (sometimes called the bell curve).

In my org, everyone is above average.

Advantages of Forced Distribution include:

• Rewards higher performers; stops peanut-butter spread of compensation
• Creates focus on results
• Encourages a higher level of effort; discourages coasting
• Can be used to stop negative/disruptive behaviors
• Can curb grade level inflation

Some problems with Forced Distribution programs:

• Hurts managers that are more skilled and successful at selecting and developing top caliber employees
• Fosters some bad behaviors: information-hoarding, passive (or aggressive) resistance, unsupportiveness, short-sightedness, unhealthy one-upsmanship, not-invented-here, redundant systems and unnecessary complexity. Employees quickly figure out that supporting someone else’s project and long-term improvements don’t translate to promotions and the top rankings.
• Tremendous subjectivity in ranking process. Rating sessions can quickly become group-think exercises as the managers latch on to any reasonable-sounding rationale for pushing an employee to a lower bucket.

If your company practices Forced Distribution:

• Identify clear criteria for differentiation
• Adjust distribution targets based on team performance
• Create incentive for long-term contribution
• Apply evenly at each level. Otherwise, lower grade levels receive a disproportionate number of lower ratings.
• Implement effective leadership development programs for all levels of management

Forced Distribution can be performed annually, but setting a target percentage of lower performers to manage out each year is not sustainable. Returns diminish and turn negative quickly, generally after a couple of years. (There are certainly times when low performing employees have to be managed out. This topic is discussed in a different post.)

Forced Distribution drives important performance behaviors, but is not a silver bullet for performance management. It’s easy for a company to implement Forced Distribution badly and do more harm than good. And companies that implement Forced Distribution without investing in leadership development for all levels of management won’t see the performance returns they expect.

-Donny