Normalisation of Performance Ratings and its Practice in Indian Software Organisations

Volume 17, Number 4 Article by Ramya T V December, 2005

Normalisation of Performance Ratings and its Practice in Indian Software Organisations :

A powerful instrument in shaping performance in high performance organisations is the employee ranking process, a practice that usually follows the employee rating exercise. Businesses frequently use the ‘normal’ or bell curve to arrive at performance ratings on employees. A relative ranking of the entire unit is arrived at through discussion and deliberation, in which all the managers of the unit engage. All candidates are forced into a normal distribution so that most of those scored fall under the ‘bell’ of the curve, with top performers represented by one tail of the curve and low performers falling under the other tail. While forced rankings are effective in organisations that have good performance rating systems, they may promote a simplistic management approach to annual evaluations and adverse impacts in critical areas of motivation, supervisory relations, decision making, resource utilisation and teamwork have been researched and reported. Its detractors are of the view that depending on an organisation’s culture and strategic goals, there may be hybrid alternatives that would prove more valuable in managing and developing performance, including no rating and no ranking, and rating but no ranking.

Indian software organisations too have adopted the tool of normalisation in recent times, but there is little research available on the details of its practice. Ramya T V undertook a survey of the practice of normalisation in Indian software organisations. The project methodology consisted of a formal questionnaire approach, direct interviews with managers and a mini-case report of a manager’s normalisation experience.

The findings of the survey analysis, many of which tally with the literature review, indicate that despite the discomfort of managers with the system, normalisation could evolve as an effective tool for shaping performance in the Indian IT industry, but it should be aligned with other organisational processes. Organisations also need to have greater clarity on the process and make it more transparent.

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