It's been a long-held assumption that human performance fits a normal distribution — a bell curve in which only a very small number of people are outliers.
When applied to work performance, it basically means that most performers (68%) are in the middle and are average performers while 16% are high performers and naturally the other 16% are low performers.
While easy to understand, this model does not accurately reflect the way people perform. Research conducted in 2012 by O’Boyle and Aguinis with 633,263 people in a total of 198 samples found that performance in 94% of these groups did not follow a normal distribution. Rather they fell into what is called a "Power Law" distribution. Most performance was generated by a small group of “superstars”.
This graph of employee performance looks like a ski slope (red) where the under-performers are at the upper most starting point of the slope and high performers are at the tip of the end. The typical/average performer would fall below the mean or average result. Again, in this model, the typical performer is “below average” (speaking from a statistical perspective).
There would be approximately 80% below average, 10% around the middle, and 10% exceeding; meaning that the assumption that the typical performer is average is a myth of the normal distribution assumption. The results lend themselves to the “80 / 20 rule”, which says that 80% of the work is done by 20% of the people.
To quote Josh Bersin:
“The really big difference between the “bell curve” and the “power curve” is that the power curve reflects the fact that a small number of people deliver an inordinate amount of contribution. This means that "most people" are below the mean. It does NOT imply that most people are lower performers, only the fact that the variability of performance is high and that the curve should not be equal above and below the mean.”
Sounds cold doesn't it? People believe the bell curve is "fair." It’s nice and neat. There are an equal number of people above and below the average. And fairness is very important. But fairness does not mean "equality" or "equivalent rewards for all." High performing companies have very wide variations in compensation, reflecting the fact that some people really do drive far more value than others.
Given the research findings, doesn’t this indicate that compensation is inefficiently distributed? If you believe the results, then at the very least we need to examine the design and focus of our programs. Perhaps it’s time to rethink them - and find ways to create a higher variability in pay. Think about paying people based on the value they deliver.
Maybe we need to shift focus away from the majority of the current workforce and to the superstars that have the greatest company impact. The revenue producers. Those with critical skills that can “make or break” the company.
Maybe when you find someone who's truly outstanding, the normal pay rules shouldn't apply.
What do you think?
Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. Her true love is working with local national issues. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.