Posted in : Business & Motivation

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I was recently doing research when I came across an interesting article written by Josh Bersin in Forbes. A business associate of mine had introduced a business opportunity to me and I wanted to attempt to identify it on an s-curve when I stumbled across Josh’s article. In a nutshell, he debunks the bell curve in terms of employee performance management and it so intrigued me and hit on a such a hot spot of mine that you now get to read about it on my blog.

The article puts forward the following four posits:

1. Human performance does NOT follow The Bell Curve also known as “Normal Distribution”
2. Human performance instead follows The Power Method also known as the “Long Tail”
3. The Long Tail model consists of:
a small number of people who are “hyper high performers
a broad swath of people who are “good performers”
a smaller number of people who are “low performers”

and most compelling…
4. The Bell Curve Model Actually Hurts Performance

These posits are based on formidable and extensive research that you can reference from the article here.

That said though, if the research is correct along with Josh’s posits, then the question all hyper-performers are asking themselves is…why do companies continue to base their performance management models, rewards and employee compensation on the bell curve?

When I reflected on the research he provided and the experiences of my own career, it dawned on me that I actually started my first company ever based on a disparities of compensation concern I had. You see, while attending college I worked at the Four Seasons Hotel & Resort spa and health club. I was in fact a hyper-performer for them at their health club in terms of sales revenues, new customer acquisition and customer retention and upon graduation I was expecting an increase in compensation to bring me up to market value based on my newly acquired education. My manager repeatedly refused to increase my compensation to fair market value and well…the result was I quit and opened my first health club less than a mile away. It wasn’t long before word got out that I was paying hyper-performing employees better than the competition at which point I started attracting other top talent from the Four Seasons who began helping me build my new business. Now, we all know that the $4 billion dollar beast that the Four Seasons is didn’t miss me earning a million dollars worth of revenues from clients who switched from their services to mine but the point of the story is that Josh is correct in his Forbes article.

When companies use rating and appraisal systems based on the bell curve the following happens:

1. Ultra-high performers are incented to leave
2. Collaboration becomes limited
3. Mid level performers are not highly motivated to improve
4. Compensation is inefficiently distributed
5. Incentives to develop and grow are reduced

Fortunately for hyper-performers though, some companies are beginning to look at their performance management principles along with their overall compensation practices.

One example includes Microsoft, who recently disbanded its out of date performance management process because it realized it was encouraging many of its top people to leave. Two more examples of companies who recently changed their approach to compensation include Aetna and Walmart.

In January of this year Aetna CEO Mark Bertolini recently gave thousands of it’s minimum wage employees a 33% raise from $12/hour to $16/hour. Walmart followed suit shortly after in February by announcing that 500,000 full-time and part-time associates, more than a third of its work force at it’s U.S. stores and Sam’s Clubs, will receive pay raises in April to at least $9 an hour which is $1.75 above the federal minimum wage. By February 1st 2016, their pay will further increase to at least $10 an hour.

So what does all this information mean and why am I blogging about it?

To encourage employers and employees both to work together to develop new compensation models that provide livable wages as well as models that reward hyper-performers. And if you happen to be a hyper-performer then I have a special encouragement for you. Keep pushing the envelope. Keep selling. Keep innovating. Keep breaking glass.

And for those of you pondering my words in the context of your own career and performance, let me leave you with this. You have the following options and don’t ever forget them.

1. You can continue trying to partner with your current employer to modify your compensation
2. You can partner with a new employer
3. You can start your own business

Whatever you choose, I wish you all of my successes and more.

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