“The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.”
Tathagata Mukherjee, EMBA 2015-18, Vinod Gupta School of Management, IIT Kharagpur
On July 21, 2015, Washington Post reported the following “In big move, Accenture will get rid of annual performance reviews and rankings”. That created ripples again in the IT service world out here. Now Accenture are not the first one to do so. Microsoft did this 2 years ago since then companies like Adobe, Gap, Medtronic, KPMG, Deloitte have also changed their performance review process. ‘But what’s the big deal homie!!’ asked my friend Raj, who, like me, works in IT. ‘Hold On buddy’ I responded.
Bell curve, as they say it, is a methodological hammer which falls on most of the employees during the most awaited time of the year, the appraisal period. The percentage of people who come out with happy looking faces from this big sand dune is only 10 to 15% or may be even less. The whole idea of judging performance in this way has been due to some statistical proven methodology of ‘Normal Distribution’ which claims that on an average the number of very high performers in any firm is equal to very low performers and the majority of the employees are average performers. If you ask me that does it make sense in real world..I’ll say ‘Holy Duck!’.
Last year, on Jun 6 2014, Economic Times had reported in their report titled “Why companies hang on to bell curve-based performance appraisal system” that the bell curve is the least popular workplace practice yet an estimated 75 to 80% of the companies in India adapt this for their performance ratings.
I have been working for some time now and spent almost 9 years in this corporate world. Now my role demands to evaluate my direct reportees as well. It actually makes me feel very bad when during the annual performance cycle they are compared to each other and someone gets pushed off to next level down just to be compliant with the curve. Also I feel that we being humans, our brains remember recent happenings rather than older memories which also contribute during the annual appraisal cycles. So, consider that in a 50 over cricket match you were there right from the start, scored a century in good time but then in the slog overs a tail-ender comes and does a cameo to steal the man of the match trophy. How would you feel..well just because someone played the masterstrokes before the appraisal time doesn’t mean they are the best but the human brain remembers more of the cameo. So..long story short..its not that easy while rating employees at the end of a year.
So as the firm like Accenture is going to move out of the annual performance cycle starting September 2015, now the performance rating is going to be more real time on assignment basis which will result in a rating an employee actually deserves. So the whole team can win the man of the match trophy based on their performance and this cycle would keep happening based on the number of assignments one works in.
Raj said “Dude, that is awesome. Good ratings means good salary hikes every time I perform. Everyone is happy and it’s a win-win situation for every employee and the company. I better go check out if there are any openings in Accenture for me or not”. I watched Raj full with excitement as he took out his phone to do some job searching and then I started thinking about what I had read in George Mankiw’s book of ‘Principles of Economics’. It states in its very first chapter about 10 principles of economics and the 1st principle states that “People face trade offs”. So what’s the trade off here..only time can tell.