Curves in Shape? (Normalization)

“I found that my rating has been reduced post Normalization. When I spoke to my manager, he told me that he had to do it since he needs to meet the curve. Pls help me”

This is a frequent cyclical interaction, I have encountered every year, post the normalized ratings are out. I can safely assert, after having interacted with the HR fraternity in other companies, that such situations are not uncommon in companies that follow any form of normalization or forced ranking as part of the appraisal process. Normalization or forced ranking is one of the ways of ‘differentiation in people management’.

There are many types of differentiation in people management. Companies can differentiate on input parameters on which the differentiation is based and / or in terms of the output parameters or ways in which differentiation is implemented. For e.g. differentiation can be based on performance, potential, criticality / impact of the role, tenure, job level, job family or a combination of the above. Similarly differentiation could be implemented in terms of compensation, benefits, recognition, career progression, development opportunities or a combination of them.

I shall be focusing on the “Normalization” a relative differentiation based on Individual Performance. The need for “higher reward for higher performance” makes the case strongly in favor of Normalization. Forced ranking combats artificially inflated performance appraisal ratings and forces the truth into performance management. All the large companies with the exception of few government organizations have differential rewards based on the normalized performance on Individual. Some companies choose to be transparent by sharing the normalized rating with the employees, many don’t.

The two central criteria on which associates are normalized in any organization are i) Contribution / Value addition to the Units business ii) Probable contribution/ value addition to the Units business in future. All the other criteria on which associates are relatively compared are sub sets of these two important criteria. The challenge for the management here is to track / measure / assess the relative “contribution / value add to the organization” to the satisfaction of everyone. As you can imagine it is a complex and a lengthy process.

The issue occurs when the leader, in order to maintain relationship with the team members, refuses to take the responsibility of the normalization process. However, when the normalization process is backed with data, and the improvement areas are identified for team members, it is mutually beneficially for the organization and the associate. The other issues that normally occur are that the associate is not able to differentiate between the absolute performance and relative performance. On an absolute basis the individual performance is assessed against the target set for him, whereas on a relative basis his performance is compared against the others in the team.

Coming back to the associate in the beginning of the blog, the issue the associate is facing is clearly that of communication and is normally resolved through an open discussion between the Reviewer, the appraiser and the associate. At the organizational level Assessor training for handling appraisals is a must.

I have just managed to scratch the surface of “Normalization” as a process. I will conclude by saying that Normalization is a reality in the IT Industry and I believe it brings the truth out and helps us stretch ourselves to become better professionals.

So how many standard deviations are you from the mean :-)