Many organizations today use a bell-curve for performance evaluation process. They reward a small percentage of top performers, encourage a large majority in the middle to improve, and lay-off the bottom performers. Companies believe that such pay-for-performance system encourages employees to perform better. The question we explore in this paper is: does the system increase the overall performance of the company over time? We observe that pressure, if maintained below a certain level, can lead to higher performance. However, with lay-offs, constant pressure demoralizes employees, leading to drop in performance. As the company shrinks, the rigid distribution of bell-curve forces managers to label a high performer as a mediocre. A high performer, unmotivated by such artificial demotion, behaves like a mediocre. Further, managers begin to reward visible performance over the actual. Finally, the erosion of social capital could cripple the company. We recommend the use of a semi-bell-curve where someone who performers like a top performer is rewarded as one. Further, we recommend balancing pressure and morale. We recognize that such a balance is very difficult to strike, and can be successfully achieved only by decoupling to some extent the performance evaluation process from the issue of lay-offs.

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Date created

• 2006 July 23-2006 July 27

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• Document

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• Processing documentation available at: https://wiki.albany.edu/display/SCA/Processing+Ingested+Digital+Files

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32937c7b43e3e015509bb71fd40d2054

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23d738ba88f8333bc39725f9cb5bd0b8

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f9377a3ac7b50b1fca5e04fb6d679ec2

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Collection

System Dynamic Society Records

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• This collection is part of the University Archives