ICICI Bank scraps bell curve assessment
As part of a human resource (HR) policy overhaul, ICICI Bank has eliminated the bell curve assessment for employees, which rewards individual outperformers.
Employee targets based on individual performance have been eliminated for the first time in the company’s history. Employees of ICICI Bank will increasingly be evaluated based on the bank’s overall performance and growth rather than individual targets or performance.
It means that for the bank, collective performance is more important than individual performance. It also implies that a bell curve-based performance evaluation to chart out employee appraisal benefits gives way to a holistic 360-degree performance of all.
Salary increases and bonuses will now be directly linked to the bank’s performance, which means that raises for the majority of employees will be identical and will be directly related to the bank’s profitability, according to two people familiar with the development.
ICICI Bank stated as much during analyst calls in recent months, emphasizing the importance of the so-called 360-degree focus on growth and customer needs.
“Through our 360-degree customer-centric approach, we aim to create holistic value propositions for our customers, with a focus on opportunities across client and segment ecosystems,” according to the call transcript of an analysts’ call in October following the release of FY22’s Q2 results.
In the fiscal second quarter, the bank’s standalone net profit increased to a quarterly record of Rs 5,511 crore, driven by an increase in retail loans and a 9 per cent decrease in provisions for bad loans, as well as higher fee income.
Since Bakhshi took over, the bank has steadfastly avoided setting loan growth targets or favouring any sectors over others. Instead, the lender has stated that it will increase exposure wherever it meets its risk profile.
Technology has played an essential role in the growth and will continue to do so. However, the idea is that employees do not think about offering only one type of product or service, but instead offer what is available within the bank,” another person explained.
Only nine months after opening its flagship mobile banking app to non-bank customers, the bank has made significant progress in customer acquisition, according to ET last month.
Employee expenses increased by 21.2 per cent year on year, according to the bank’s Q2 results. As of September 30, 2021, ICICI Bank employed slightly more than 100,000 people. In the last year, the employee base has grown by about 8,000 people.
Bank employees would be paid performance bonuses based on group and team accomplishments rather than individual targets.”It’s a philosophy in which we win or lose together.” There are no targets left. Everyone tries their hardest, and the bank benefits.”
Bell Curve Performance Appraisal Management System
Different performance assessment systems exist and are used by various organizations. When an organization wants to link an employee’s performance with a reward directly, a bell curve performance appraisal system is typically used. Employees are classified in this system based on the ranking assigned to their performance.
Based on performance, the system divides employees into three categories: top performers, average performers, and low performers. The bell curve performance appraisal system provides a systematic method for identifying high-performing employees and linking their performance to appropriate compensation. It also assists the HR department in identifying underperforming employees and assisting them in improving their performance.
Some may argue that the bell curve performance appraisal system is a forced ranking system that does not fairly rank employee performance. However, many businesses support the use of a bell curve performance appraisal system due to its accuracy and utility in terms of improving organizational productivity.
The Bell curve is another name for such a normal distribution curve. Because the curve resembles a bell, it is known as the Bell curve. The term bell curve is commonly used in statistics and social science. In physics, it is also known as a normal distribution; however, it all refers to a probability distribution with specific characteristics, one of which is the bell shape.
The Bell Curve’s Characteristics
The curve’s average or mean is always located in the centre. The bell curve has a single-mode or peak and a well-defined standard deviation. When a company uses a bell curve for its performance appraisal management system, it means that all employees’ performance grading is distributed along the bell curve.
In this case, the bell curve is used to characterize the employees and categorize them as top performers, average performers, or poor performers.
To determine the calibre of an employee, a bell curve performance appraisal management system is frequently used in various organizations. The bell curve process makes it simple for HR to reward top performers while putting in extra effort for average performers. Low performers are easily identified, and an action plan to improve performance can be implemented.
When the Bell curve is used, the ratings of an employee are subjected to a slew of constraints. In most cases, HR must limit one out of every ten employees to the lowest possible rating, while only a few employees receive the highest possible rating. The bell curve is used chiefly at the division level in larger companies, which means that employees working in a team must compete against the manager to be a star for the performer.
To conclude performance appraisal scores and generate a relevant report, Bell curve appraisal employs the compiling method. The totalled scores are plotted on a graph that resembles a bell. The best-performing employees are marked at the top of the bell, the average employee is marked in the middle, and the lowest-performing employees are marked at the bottom of the bell.
Employees who are in the top 20% of the bell curve are rewarded with bonuses, which boost their morale, and these employees are naturally considered for future leadership positions in the company. Employees who are marked in the middle of the bell are relatively low performers, but they are above average. As a result, they receive monetary rewards and a guidance plan is developed for their future performance development. Employees at the tail end of the bell curve receive no or very little monetary compensation.
An action plan is created and strictly followed to improve their performance. Companies sometimes lay off employees who are marked at the end of the year. The supply of workers in the IT-enabled services industry is outstripping demand. The ability to differentiate between individual performances is the focus of appraisal in such an industry. HCL is looking forward to using the bell curve performance appraisal system to reinforce employee commitment. It improves the quality of talent while also ensuring outstanding contributions from employees to raise performance benchmarks.
Edited by Prakriti Arora