Forced distribution method

Forced distribution method is a tool used for performance assessment of employees in performance management system. This method abandons traditional process of achievement review, as it appeals to continuous improvement. Many organizations use this tool to create sufficient conditions for employee development, which corresponds with company expectations.

It is a method of employee performance evaluation, which functions upon the list of agreed in advance descriptions. It is called forced, as all appraisers are being forced to choose most suitable statement between already provided ones. Although, originally, its goal was to create contrast between effective and less effective employees, forced distribution method mostly separates them for noticeable and not noticeable. The intention was to fairly allocate training costs and to promote only top-rated performers. However, best employees not always get highest grades, therefore This performance management tool is effective in company cultures of understanding and support between organization and employees.

Fundamental difference between ranking method and a forced distribution method, is that evaluation upon on a second one is being grounded on a several key measurements, which are imposed by general company rules and a functional segment of each employee.

Following this method, focal points from Human Resources (or an external company) create various descriptions (usually 2 or more) of certain skills and competencies on which company/department/job group concentrates. These descriptions are being communicated to appraisers, who must choose most suitable one in each category for every employee, during evaluation, as well as the least suitable.

When the whole evaluation process is done, all outcomes are being calculated. Employee who got a higher grade is automatically being recognized as a "better employee", than the employee who received a lower grade. In some companies there are strict borders for good and bad grades, so employees who get a score, which is under the threshold of lowest acceptable point, are being prescribed to pass an improvement program, prepared by HR as well.

Main principles

There are 4 main rules, which should be followed during forced distribution method usage:

1. Predetermined Rating Categories: The forced distribution method requires managers to rate employees on a predetermined scale of ratings. This scale is usually divided into categories, such as "outstanding," "exceeds expectations," and "meets expectations," with each category representing a certain percentage of the total ratings.
2. Objective Ratings: This method of performance appraisal encourages managers to rate employees objectively, without showing any bias. By ensuring that a certain percentage of employees fall into each category, managers are encouraged to rate employees fairly and accurately.
3. Detailed Feedback: Managers are required to provide detailed feedback to explain why an employee was given a certain rating. This allows for a more comprehensive review of an employee’s performance and helps managers to identify areas of improvement.
4. Goal Setting: The use of this method also encourages managers to set goals for employees. By setting goals that are achievable and helping employees to reach them, managers can ensure that employees are performing to the best of their ability.

Example of forced distribution method

The following is an example of how a company might use the forced distribution method of performance appraisal:

The company has decided to use a five-point scale, with each rating representing a different percentage of the total ratings. The categories are: Outstanding (10%), Exceeds Expectations (20%), Meets Expectations (45%), Needs Improvement (20%), and Unsatisfactory (5%).

The manager reviews the performance of each employee and assigns them one of the five ratings based on their performance. The manager then provides detailed feedback to explain why the employee was given a certain rating.

The manager then sets goals for each employee to ensure that their performance improves. The manager will review the employee’s performance on a regular basis and adjust their goals as needed.

Finally, the manager will evaluate the employee’s performance at the end of the year and assign them a rating based on their performance. If the employee has achieved their goals, they may receive a higher rating than expected.

Advantages

There are certain long-term values, such as productivity and profitability increase, which company obtains due to forced distribution method usage. This method is also being widely used because of below advantages:

1. Equal evaluation process. Forced distribution method is mostly being used by international organizations with diversified process structure, which leads to struggle of providing global performance management equally. But thanks to the method, such companies are able to offer career paths spread widely around the world for top-rated talents.
2. Highlights future front-line leaders. Such focused-on delivery and visibility culture helps to identify employees who will take over top-positions in future. Therefore, company can start training process in advance and adapt to the future conditions.
3. Appraisers cannot support favorite employees. The most important advantage, for which this tool is being used widely, is that in theory appraiser doesn't know which descriptions are being rated with more points, so he/she cannot help preferable employees to get higher grade. The main idea is that each appraiser just has to provide description of his /her subordinates, using prepared statements, and HR focal points just have to apply international standards to each evaluation. Which means score is being calculated with 2 independent parties, who cannot have any impact on the end-score. Therefore, forced distribution tool is a very good way to evaluate employees fairly. However, this type of assessment may not be the most effective for cross-function teams. Because, usually, appraiser doesn't have clear understanding of amount, type and struggles related to the certain functions, which makes the appraiser to examine employees based on his/ her own understanding (which is usually not aligned with truth). As a result, employees get an unfair score, which leads to frustration and decrease operational effectiveness of the whole team in general.
4. Quick and easy. Additional advantage of this method is it's relatively quick and easy model for understanding and implementing. It is also very for HR to target development programs to appropriate talents, as all employees are divided into groups.

Disadvantages

Despite all pros of forced distribution method, it still has a lot of cons, which can have an impact on work environment and employee's performance in general. There are 2 most dangerous disadvantages, which may retain company from growth:

1. Forced visibility. For example, employee should be visible among others, so his/her results could be fairly rated. This type of behavior is not typical for introverts, so can be rated lower, even if they did a remarkable job, just because they are not showing off their progress. Due to such pressure, excellent employees, who are not interested in enhanced attention may just leave the company.
2. Negative impact on innovative employees. Sometimes grades could be very low for an excellent employee, just because appraiser has only limited options to choose from. This may lessen the creativity and work energy of subordinates. The most creative people usually have the worst situation, as they take risks and have many failures due to that. That is why companies, who consider themselves as innovative, should be very careful with forced distribution method, as not always it can coexist with innovators. As a negative result - innovative employees can either stop being creative or just move to another company, where they'll be respected. Such situation will affect company, as main key to success in today's economy is to be creative and innovative.

Similar methods

• 360-degree feedback: This method involves gathering feedback from multiple sources, including peers, supervisors, and customers, to evaluate an employee’s performance.
• Peer review: This method involves having a group of employees evaluate each other’s performance.
• Forced ranking: This method involves ranking employees from best to worst based on their performance.
• Performance by objectives: This method involves setting objectives for employees and then evaluating their performance based on whether or not they meet those objectives.
• Behavioral-based appraisal: This method involves evaluating an employee’s performance based on their behaviors and attitudes in the workplace.
• Competency-based appraisal: This method evaluates an employee’s performance based on their competencies, or skills and knowledge, related to their job.
• Self-appraisal: This method involves having employees evaluate their own performance.

Conclusion

Although main goal for this method is to shape employees for certain continuous improvement mindset, it is recommended to use it only in situations when company consistently delivers results, which are above of the industry expectation. Because only in that situation organization can comply with set superior expectations, so employees will remain motivated to keep work on improvements for themselves and their processes.

Forced distribution method — recommended articles

Merit rating — Contingency leadership — Theory X and Y — Appraisal method — Task identity — Management by objectives — Bonus scheme — Team stages — Achievement oriented leadership

References

• Bhattacharyya D. (2011). Performance management systems and strategies, Dorling Kindersley, India, pp. 95, 64-65.
• Cardy R., Leonard B. (2015). Performance Management: Concepts, Skills and Exercises, Second Edition, Routledge Taylor& Francis Group, New York, pp. 115-116.
• Sahu, R. (2007). Performance management system, Excel Books, New Delhi, p. 164.
• Varma A., Pawan S., DeNisi B. and DeNisi A. (2008). "Performance Management Systems: A Global Perspective", Yang H. and Rowley C., Performance Management in South Korea, Routledge Taylor& Francis Group, New York, pp. 217-220.

Author: Veronika Tomilova

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