Need for Innovation in Performance Management Practices: Effects of the Forced Distribution Rating System
With the evolution in Human Resource Management from the erstwhile Personnel Management domain, there has been a corresponding evolution and increase in complexity in the performance management systems adopted by organizations. The Forced Distribution Rating System, commonly known as the Bell Curve model, is a system that is still used. In the last few years, there has been frequent criticism of the FDRS. This paper takes a critical look at the Forced Distribution Rating System and attempts to examine the various ways in which it has come to be considered as an outdated system of performance management, as well as explore some of the alternate systems that have been proposed. With companies steadily moving away from FDRS, this paper adds to the existing body of work on performance management to enable managers to take the best possible decisions. Appraisal-linked-pay increase being a key area of concern for human resource managers, this paper suggests the need for alternate performance management systems, by demonstrating the high correlation between employee dissatisfaction and use of the FDRS, and the unreliability of the bell curve system, when linked with incentives and rewards.