Wednesday, May 19, 2010

All by the Bell

It is that time of the year when most companies in India complete their annual appraisal and a nervous moment for employees and organizations alike. Even though most organizations now have a policy of monthly or quarterly department reviews, half yearly reviews for employees, it all usually boils down to this one point.

The reason this ultimately becomes the moment of truth is the fact that this is the one and only occasion in the year when every person in an organization will get monetary rewards, usually depending on the level of their performance. Whether you like or dislike math & stats, this will be one time of the year where numbers, formulae, equations and their graphical plots will become most important part of you tea time chat, water cooler conversations, smoking break talks- basically everything away from work.

Also a new fascinating curve rules your mind; so fascinating, its mystique has been matched by the number of names it has: Bell Curve, Normal Distribution Curve or Gaussian Curve. This is usually the plot for the Normal Distribution equation which usually defines what Normal is. A typical plot of the normal distribution symbolizes where the most concentration of members within a given set lies. On any given day, most people will want this to be as narrow as possible with a sharp peak.

But appraisal isn’t just any day- its seriousness can only be matched by the judgment day. And this is one time where no one wants to be normal, all want to be extraordinary. Thanks to the beauty of this curve and its application, it has the potential to create discontent in any organization.

Suppose an organization offers 5 grades of appraisal where Grade 5 get 35%, Grade 4 gets 25%, Grade 3 gets 18%, Grade 2 gets 14% and Grade 1 gets 8%, the curve has the potential to distribute 100 employees in a perfect way where top 20 people will get either Grade 5 or 4, the next 60 will get Grade 3 and the last 20 get Grade 2 or 1. This is what I say the beauty of the formula which makes it such an appealing curve. But this is also the ugly side of the curve. It will always leave too few at the top and too many in the middle; leaving a lot of scope for discontent.

It is not unusual for a Grade 4 person to end up amidst Grade 3 and hence crown the person as normal. The problem is the fact that we like to express a continuous curve equation split by percentile slabs which are linear. Also the cake is baked based on the total turnover of the company- so you will be judges on a personal best but paid you share of the cake based on the company’s average.

Okay I realize that the math is pretty boring. So let us just try an analogical model. Not that I am a master in psychology, but I feel I’m good with metaphors.

So let us just take the curve to be a real Brass Bell, a nice hollow bell much like the shape of the normal curve. The bell has a sound edge and a clapper which together make the sound. In two dimensions, the sound edge is at the 2 ends, a hollow chamber in between with the clapper in the middle.

The edges form the top deciles of the bell curve; the edge struck by the clapper being the achievers (or ones who can be convincing fakes) and the other side being the cribbing party. The middle consists of the clapper; the workers who support the achievers. Since they are in the hollow, they just seem to resonate with the sounds from both edges.

Appraisals also have something funny about them. That’s called justifying the numbers. Usually, it is your reporting manager who has to play host to this part. The act is usually of convincing a Grade 4 of why a Grade 3 was awarded. Best excuse is; the company is not really doing well… meaning I know you deserve more, but there is a bag load of slackers you have to pay for from your incentive.

A question I want to ask in general is what came first; the data that gave rise to the equation and the curve or do we make the effort to just adjust data so that we can justify its dispersion with the curve?

How does a Grade 3 organization plan to retain Grade 5 and 4 employees if its all going to be All by the Bell?