Advantages of Bell Curve:

Grading by the curve does not always ensure that the everyone will get what they
deserve but it benefits the company in some ways:

1. People with low grading will either forced to perform better or they get
replaced with another capable staff. In any way the organization gets better
workforce by re-calibrating the lower curve every time.
2. It promotes healthy competition: Bell curve grading promotes healthy
competitions among the workers and they tend to push their limits when
they see their colleagues with higher grading. This process ensures that the
employee will be motivating him/her for the next appraisal cycle to
perform better and get try to be on the “creamy” side of the curve.

Disadvantages of Bell Curve:

According to the Vaishnav, C., Khakifirooz, A., & Devos, M. (2006) the
bell curve actually hurts the moral of the workers in the following way:

1. Impressions of motivation: Management thinks that poor rating of a

particular employee or worker will motivate him/her to perform better and
get better ratings next time; but in reality, the worker gets demoralized but
facing constant pressure of performing better and it may lead to bad
performance.
2. Visibility gets all the good appraisals: Suppose management awards
good performance indicators to the workers who can produce more than
others and on the other hand a worker is trying to improve the efficiency
of the machine so that it will benefit the company. Employer A will be
visible to the management as a good employee and gets appropriate rating.
If this practise continues the workers will be more interested in producing
more ignoring about increasing the efficiency.
 3. Team work suffers due to constant pressure for performing better:
With such constant pressure and getting a visibility to the management;
workers and employees get self-concerned and try to perform better
individually ignoring the team work and group tasks.

References:

Vaishnav, C., Khakifirooz, A., & Devos, M. (2006). Punishing by rewards: When
the performance bell-curve stops working for you. In Nijmegen: International
Conference of System Dynamics.