The normal distribution or the ‘bell curve’, most memorably introduced into performance management by GE,

has now become an article of faith and an essential and inalienable part of performance management systems.
Yet, its efficacy has been less than satisfactory. Most managers and employees have very few good things to
say about it. Left to them, they would do away with it.

Nassim Nicholas Taleb, author of The Black Swan calls the Gaussian Bell Curve “that great intellectual fraud”
because it does not deal with randomness. “Measures of uncertainty that are based on the bell curve disregard
the possibility, and the impact, of sharp jumps or discontinuities...using them is like focusing on the grass and
missing out on the trees,” he writes. Yet he concedes, “We can make good use of the Gaussian approach in
variables for which there is a rational reason for the largest not to be too far away from the average...If there
are strong forces of equilibrium bringing things back rather rapidly after conditions diverge from equilibrium,
then again you can use the Gaussian approach.”

The application of the bell curve in performance management assumes that in any work force population,
performance will follow the normal distribution, with the majority of the employees tending towards the
average, a few above it and a few below. This implies that performance is relative and not absolute. Thus, even
if an employee has exceeded his goals, he may still not be rated better than ‘meets expectations’ if his peers
have done better still. Likewise, it forces managements (again on a relative scale) to identify those who are less
than good. Thus, an employee who has met all his goals may still end up in the ‘partially met or did not meet
expectations’ list.

If employees who have met their goals get a ‘met expectations’ rating, if those who have exceeded them are
rated as having ‘exceeded expectations’, if those who have not met expectations get a ‘partially met
expectations’ rating and if all these categories conform to the desired distribution, only then would one have no
problem with the bell curve.

Problems arise because a lot many more employees than are permitted to be ranked as having ‘exceeded
expectations’ are given that rating. And on the other hand, fewer employees than required by the bell curve are
given the ‘partially met expectations’ rating.

The problem is acute when the company or business unit has over-achieved on its business targets. In such a
case, there is a clamour for the curve to be shifted to allow for a higher proportion of the work force to be rated
outstanding, and fewer (or none at all) to be rated as partially meeting or not meeting expectations.

Yet when business results are poorer than budgeted, no one suggests that a higher proportion of the work force
must, in such a case, be rated as not having met expectations! Managers find it hard to explain that regardless
of business unit performance, there can only be a select few (as per the normal distribution) who could have
been truly outstanding, and that likewise, the proportion of relatively weak performers will remain the same
regardless of business results. If it is desired to reward employees in an exceptionally good year, the way to do
it would be to increase the incentive pay applicable to each level of performance, rather than to shift the bell
curve. Contrarily, in a poor year, there would still be a select few outstanding performers but incentive payouts
would be sharply reduced.

In India, the bell curve has proven even more problematic as managers fear that employees rated good or less
than good will leave them, thereby jeopardising their own performance in the year to come.

The bell curve will work if (in addition to the pre-conditions laid down by Taleb!)
The business is not new or embryonic.
The business environment is not so uncertain and dynamic as to render goal-setting and planning difficult, or
in extreme cases, nugatory.
The performance bar rises every year so that only a few can perform outstandingly (at the same time, if goals
are seen as unachievable, even the best performers might leave).
Goal-setting is rigorous and goals are not sandbagged, so that the “outstanding” category does not become a
cosy club whose entry is forbidden to others.
The organisation is able to understand performance, not merely measure it; this means moderating ratings
where performance was influenced by external factors (positively or adversely) at both the organisational and
individual level.
The process is seen as fair, and the majority of the work force accepts and acknowledges those amongst their
peers who have achieved an ‘exceeded expectations’ rating, and those who have been rated as ‘partially meets
expectations’.
The sample size is reasonably large.
Jobs and performance can indeed be compared across functions.
The process is communicated effectively and clearly to all employees.
Opprobrium is not associated with a ‘meets expectations’ rating, and it is accepted that an employee who
consistently meets difficult targets is a high performer.

This last point is especially important because in many organisations in India, rewards and career progression
are disproportionately stacked in favour of the top rated performers. So the vast majority in the ‘meets
expectation’ category feels hard done by, and fights to be rated higher. The answer to this is to formulate and
communicate a rational compensation policy and career framework. The firm’s desired positioning relative to
market, its policy regarding functional and performance premiums, and career growth for different levels of
performance should form part of such a policy framework.
If these conditions are met, there is no reason why, over time, the bell curve should not come to be accepted as
reflecting workforce performance reality.

Sankar Ramamurthy is an Executive Director at PwC & leader of the firm’s People & Change consulting. He
can be contacted at sankar.ramamurthy@in.pwc.com

Six Sigma has been well applied in manufacturing through improving processes that use the DMAIC
methodology. Some larger corporations have integrated Six Sigma so well into the corporate culture
that it can be considered the DNA of the company. However, even in such companies, the human
resources department has been practic ally untouched by Six Sigma. In a recent conference of the
human resources professionals in Chicago, it was clear that HR people are now looking to benefit
from Six Sigma initiatives. Two of the questions that have been asked are, “How does HR implement
Six Sigma?,” and “What can HR do to help Six Sigma initiatives in an organization?”

Businesses develop strategies for profit and growth. The strategy is driven down through action plans
for execution. Most strategies fail to get down to the floor level and get lost in the middle layers of
management, but HR can help execute the profit and growth strategy through the use of Six Sigma.
Figure 1 shows the important role of HR in driving business strategy through Six Sigma and in
creating the Six Sigma culture. The HR department interacts with and influences every employee;
therefore, it’s the department best suited to facilitate management change. The figure shows that an
organization needs HR to integrate Six Sigma methodology and a business scorecard to achieve
growth and profitability.

When Motorola first successfully implemented Six Sigma from 1987 to 1992, its management
program of setting goals, sharing savings, risk-taking and linking personal goals to corporate goals
all played important roles. As a result, the company grew, made lots of money and rewarded its
employees with bonuses. The ch allenge in implementing Six Sigma in HR includes questions such
as, “What should I do?,” “What should I measure?,” “How would I improve the HR process?” and
“How can HR be at 3.4 parts per million as it doesn’t deal with a million people?”

It must be understood that HR isn’t a huge part of any business, but it has a huge effect on every
business. Human resources should be considered as human capital. HR must ensure that there’s
good return on investment in human capital. Typical HR functions include benefits management,
compensation, recruitment and skills development. Innovation and change management must also
become key functions in the HR department. In addition to managing these functions well,
managing idea to innovation, improving HR functions, and accountability of employees and
executives must also be implemented.

Figure 1. Six Sigma and Human Resources

 One must create a process map for
HR department to clearly understand
HR functions and prepare for
implementing Six Sigma. For the
critical steps in the HR functions, one
can answer the following questions to
identify opportunities for
improvement that can be exploited by
applying the Six Sigma methodology:

 What is the purpose

the HR function or sub-function?

 What are the expected

deliverables (people, skills, services,
value, reports, etc.)?

 What are the

measures of goodness of key-
deliverables?

 What are the error opportunities for key-deliverables?

 What improvement activities are carried out in the HR function?

Answering the above questions, one can identify output (unit), measures of reliability, and items and
elements that can go wrong (opportunities for error). Having identified ‘what’ to measure, one can
establish a baseline for key performance indicators, which may include one or more of the following:

 HR Responsiveness

 Employee involvement

 Idea and innovation for improvement

 HR effectiveness in fulfilling its intended functions

Implementing Six Sigma in HR is no different than applying it in other functions. The key is
recognizing gaps or opportunities for improvement by breaking down processes in manageable
chunks. The HR function can take the following steps to implement Six Sigma in HR or to facilitate
implementation of Six Sigma in the organization:

 Establish a clear and significant role of HR for institutionalizing Six Sigma

 Establish Six Sigma objectives and role in HR

 Seek customer feedback and identify opportunities for improvement

 Establish Six Sigma goals for HR function

 Formulate, prioritize projects and form teams

 Provide Six Sigma Green Belt training

 Implement DMAIC for breakthrough solution.

Examples of Six Sigma projects that companies’ HR departments have completed include reduction
in overtime, reduction in time and cost to hire an employee, reduction in employee retention or
turnover, reduction in safety violations, reduction in cost of employee separation, and HR response
to internal inquiries for benefits, payroll, promotion and fairness.

Six Sigma implies dramatic improvement through reengineering or innovation of the HR function.
HR involvement in achieving corporate growth and profitability must be defined. The HR role must
support leadership and departmental activities, provide feedback, and intellectu ally engage
employees in achieving their personal and corporate objectives. Customers expect better, faster and
cost-effective solutions. Unless every department performs better, faster and cheaper, the company
will be unable to meet customer expectations. HR is no exception to this expectation. It must be set
to perform better, faster and more cost-effectively by creating value rather than just rote support of
management or training. Creating value could be accomplished through innovative solutions and
employee innovation. This is a low-hanging fruit for HR.
How to Use Six Sigma to Improve HR

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JAMES LOPRESTI— AUGUST 14, 2017

Human Resources and Six Sigma aren’t often mentioned together, and there’s a good reason. HR is difficult to
analyze objectively.

It’s not manufacturing. It’s not labor. So much of the job is immeasurable.

Employee happiness, for example, can’t be quantified in a number or a report. Recruiting top talent is less
about numbers and figures than it is about personalities and culture.

So how does an HR professional use Six Sigma to make his or her job easier?

Simple. Use it on what can be measured.

HR Compensation Processes
Think about all the processes related to compensation. How might you speed up overtime authorizations? Can
you offer the benefits package through an online portal, so you’re not spending time trying to chase down
signatures from every new hire? Can you create a clear performance review rubric for managers, so they’re not
spending hours and hours evaluating their teams?

Orientation and New Hire Processes

What does your new hire orientation look like? Could you email new hire paperwork to new hires the weekend
before their start date and save everyone involved an hour of their time? Can you host an employee’s direct
deposit information on an online portal, so he or she can update it without knocking on your door?

Formal Complaint Processes

How many harassment complaints do you get every week? If it’s more than five (and if you’re in a large
organization, it probably is), consider setting up a specialized email where victims can report the situation.
That way, you can print the email directly from your computer and add it to your files without having to
pursue a formal written statement from him or her.

Legal Expectation Processes

Employee handbooks can be expensive to print, especially in large organizations. You can save a lot of time
and money by printing one or two handbooks and keeping them in your office, while at the same time making
the handbook digitally accessible on an employee portal.

Recruitment Processes
Instead of asking managers to write job descriptions (which are often lengthy and confusing), provide a single
template for all jobs in the company. The managers can simply plug in the details of the job and send it back to
you, and you can provide the template to the recruiter for use in scouting talent.

And speaking of talent, what systems do you have in place for responding to applicants? Is there any way to
streamline that process by 50%? Because slow response times could be costing you top talent.

Rewards and Recognition Processes

Do you have specific expectations in place for each role in the organization? If you talk to managers to better
define the roles in your workplace, you can create an objective system for rewards and recognition. More
frequent (and consistent) rewards can improve morale and performance across the entire organization, even for
those people who aren’t recognized.

Don’t let the variable nature of your role in HR prevent you from streamlining the processes you use most
frequently. Think about where you’re expending most of your energy day-to-day, and ask yourself if there’s
anything you can do improve that process.