The performance management has to provide useful outputs for the development of the organization and its employees. The high potentials and top performers are identified through the performance management process. The low performers are identified, and defined consequences are taken. The performance management without the forced distribution does not provide that credible information.
The unmanaged performance appraisals lead to invalid results. Managers tend to be polite to employees, and they do not like to provide the objective feedback about the performance of the employee. They tend to increase the gains, and they tend to polish the development needs of the employee. HR has to introduce the system, which will force managers to provide the objective feedback. Most organizations introduce some kind of the forced distribution (or normal distribution). It is not relevant, how many employees are allowed to be in the best rating. It is essential, that the forced distribution in the performance management exists.
First, the organization needs to align the results of performance appraisals with the business results of the organization. Many organizations have no link between the performance of employees and the performance of the organization. The system cannot be trusted in such a situation. HR and Finance have to define the global rule for the performance management. Many organizations define specific forced distribution rules for each bigger unit in the organization. It makes the results aligned with the business performance automatically. It hurts excellent employees in substandard units (as they have automatically lower ratings). However, these individuals can be treated separately.
Second, HR has to set detailed rules for the distribution of employees in the unit. Many performance management systems have the basic rule of the forced distribution for everyone. The distribution is required from all managers in the organization. This can lead to bizarre results as many managers have no enough employees to build the full curve. HR has to demonstrate some flexibility in allowing managers slight adjustments of the curve.
Third, HR has to implement the rule of the calibration of performance appraisal results. The top management should be responsible for the calibration of results. Most organizations make a proper calibration of the direct reports to the top management. The top management (as a group) confirms or changes performance ratings of the individual managers. They have the evidence, and they judge. This tool is extremely useful as it gives a chance to speak about each individual and discuss the career opportunities in the organization. HR manages the calibration meetings at lower levels of the organization. During the calibration, the best employees are always identified (as each manager knows, who is the most valuable member of the team).
The organization can implement some changes to the forced distribution. Many organizations make a strict distribution just for the top grades. They leave the bottom grades to be used by managers freely. These organizations act just on the top grades. They have specific initiatives defined for employees in the top grades, and they do not act on the bottom ratings. Other organization do not monitor the top grades, but they act on the low performers in the organization. It is a excellent idea to provide some space for managers.
The forced distribution in the performance management is crucial. Without the distribution, the system does not provide useful information for Human Resources and the top management.