The death knell has sounded for the performance review in media reports and books more times than your HR memory can recall I’m sure. But chances are high that you’re still working in an organization that conducts them in some way, shape or form.
So I ask you:
What are you doing in HR to make sure that your managers are succeeding at making performance reviews more meaningful?
Ideally you want your managers to be like a maestro conducting an orchestra – so to speak. You want to help them consistently identify areas for development, and to provide ongoing feedback and coaching to their teams. You want to give them the skills, practice and tools to ensure they are leading their ensembles in perfect harmony, right?
Which brings me to my next point. You’re likely using some kind of rating scale in the process to assess and rate competencies in the review process. Short rating scales like the basic “meets” or “exceeds” are appropriate for responding to some very straightforward information.
However, if you believe that your company’s core competencies are a real competitive differentiator, but then give your managers and employees nothing but a 1 to 5 to assess those competencies, then you’re doing them a disservice. Non-descript, short rating scales for appraising your company’s or a position’s most critical competencies mean your managers are using a completely inappropriate tool to guide the appraisal process. Short rating scales provide no detail, dimension, context or comparative capability. In essence, you are asking managers to play a concerto using a sledgehammer.
Short scales in this context hobble your managers. With such limited descriptions of performance and a bunch of simple check boxes, there’s no way to get to the heart of an employee’s performance, let alone capture any valuable feedback. Without a scale that provides enough of a spread to ensure individual employee performance is accurately measured, you can quickly end up with uninspired, vanilla reviews that read the same for the majority of employees.
While the intent of the short rating scale might be to simplify the process, if used inappropriately it can actually make things a lot more complicated. For example, when it comes time to manage associated tasks like pay for performance, it becomes very difficult to accurately identify who should be receiving what. With your vanilla reviews, when everyone receives a simple 3/5, it’s going to be very difficult to justify whose performance is noteworthy when you don’t have the data to back up that decision.
Speaking of accuracy, short rating scales can also bring with them another major issue – grade creep. Cathy Martin over at Intellectual Capital Consulting does a great job discussing this tendency for managers to rate employees the same or too high, and has some other great ideas for removing subjectivity from the process. Check out her posts – Cathy’s posts are well worth the read.
With such limited options in a short scale scenario, managers are going to have a difficult time providing accurate feedback, and are likely to select “exceeds” expectations when they have no context for what “meets” and “exceeds” mean exactly.
This “grade creep” when multiplied across managers and your entire organization can become a major issue. Using the pay for performance context again, suddenly you have 25 employees who aren’t actually exceeding expectations, but need to be compensated as such, which means the allocated merit pay budget is going to take a hit.
Competency-specific, longer, detailed rating scales provide managers with an effective tool to measure and accurately capture each employee’s performance. This approach helps HR to put performance front and centre in the appraisal process, and is an important way to help managers give feedback that’s correct and complete. When everyone understands the meaning behind the rating, they can focus on how their accomplishments work towards a higher rating, or how they’re going to need development to close a gap in a certain area. With this kind of focus, communicating expectations and inspiring good conversations around performance is music to everyone’s ears.
Editor’s Note – Don’t Feed the Vendors is a special series at FOT. The goal of DFTV? We get hammered by third parties who want to write at FOT, so we give them a challenge. Write something cool and significant we can learn from/talk about in the FOT style, and you can roll with the FOT crew. Try to sell our readership your product and/or provide a whitepaper, and we’ll openly mock your company in public for not understanding the DNA of our readership. Many inquire, few follow through once they learn they can’t post a workup of their latest “research”. For those who make the cut, we’ll offer up associate FOT membership as part of the Don’t Feed the Vendors stable.
Sean Conrad of Halogen Software is one of the vendors who makes the cut. Show him some love in the comments for being up to the challenge and not writing something that should be read on PBS.
Great post! I have been doing some thinking recently on this very topic. It is great to see that it isn’t just me who questions the validity of performance review when given the 1-5 option. However, I also question whether or not these ratings should be tied to money. The reason is this: when you are trying to improve performance, it should be about performance. If you attach money to it, isn’t that the thing people are most concerned with? Are they losing focus on what the issues really are? I would love your opinion on this! Thanks!
Hi Stacey, thanks for the thoughtful comment!
One option is to drive compensation off of goal results – tie those measurable results to variable pay or bonuses.
The main thing is to use some sort of a more valuable rating tool than a standardized rating scale. You might still have 5 ratings, but for example in a competency called “Change Management” instead of “Exceeds Expectations” the rating above the middle might be “At times, has exceeded expectations in terms of identifying obstacles to change, and taking steps to remove obstacles and implement change.” Each rating has a lot more detail and is much easier for employees and managers to work with. This tends to help focus on development as well. The challenge is that this is a lot of content – each rating is unique to each competency – but there are competencies you can purchase that come with this level of detail and of course some good performance management tools come with this kind of content included.
Now your organization still might be using performance to drive increase recommendations in base salary – but you can do things to help keep the appraisal from being all about that. For example hide the scoring on the form. In the end you may still be using those ratings as part of what goes into a compensation increase decision but there is no need to highlight that during the performance review.
In a previous job, I was under a scale of 1-3 but that also included competencies-specific comments and goals. I agree that competencies are very important when creating and measuring employees against their goals, but I felt that reducing me to an overall number between 1 and 3 really knocked the competency focus out of the ball park. It made me feel like my performance was easily reduced to one of three numbers and there was only so much cash to go around to the all star “3″ performers. Needless to say, I got a 2 – nice job, you’re not failing, but you’re not within our pay bracket for big raises this year.
Thanks for the thoughtful comment Emily!
Yes, it is important to pay close attention to both the scale used and how it is applied in the organization. In my experience most organizations are using a 5 point scale – but I have seen some 3 and 4 point, and some 6 and the odd 10 point!
It can definately change the conversation if you do a couple of things to take the focus away from the rating – like hiding the numbers on the form itself and of course using the form and your communication to focus the process on development. Even using a 3 point scale, I am betting in your example it would have helped if the scores and overall ratings were hidden. Those things can still be available for reporting and driving comp decisions, but you don’t have to shove it in everybody’s face on the form – that might help keep the conversation on development instead of “what number am I?”
With more detailed evaluations, it becomes less likely for favoritism to occur, or at least when an employee receives an evaluation that is less than favorable, they should have a little more detail to either seek a new evaluation or to improve their competency levels so that next year, the evaluations are much improved.
Thanks for the comment Esme.
Yes, the more detailed behavioral ratings are a great way to encourage more objective ratings. I think you are on the right track with improvement – if the focus is on development in the process the rating itself is less of an issue for everybody involved and the entire process is more valuable and productive.
Managers today are personally overworked and have less and less time to perform adequate performance assessments. While the stated goal of a meaningful, descriptive narrative is admirable, it is unfortunately not realistic except in the minds of HR and academic types. Line managers have their hands full “getting the work out” in an efficient, cost-effective manner. It is more productive and relevant for employees to receive short-burst feedback, positive or negative, as events occur. There should never be any surprises when an action, good or bad, impacting the employee occurs.
Thanks for the comment John.
I do agree that review time is NOT the time for feedback. Feedback is only effective if it’s done right at the time, and that’s part of the year-round job for every manager. A good talent system of course has tools to enable and track that feedback. The great news is that if managers have been using those tools and recording that feedback during the year, the review process is fast and easy!
One of the other reasons to go with a long descriptive rating scale you rightly point out – it is much more efficient for managers. That’s why I am suggesting using a rating system that already includes those long written narratives so the manager can just quickly choose the appropriate one. It’s much faster for a manager to choose from a detailed rating scale than it is to figure out what “Exceeds” means in each case and then write the narrative to go with it themselves.
I think we disagree in one respect though – I think developing employees and working to get them performing better is every manager’s job. The review process isn’t something that you find time to do on top of your job as a manager – it is part of the job. A good review process is a tool that enables managers to develop employees and help them perform better – and do it more quickly, efficiently, and effectively than they could otherwise. It’s HR’s job likewise to provide tools to make accomplishing this as fast and easy as possible for managers.
Sean,
Thanks for the thoughtful analysis of the use of rating scales in evaluating performance. Here are some of the key issues I’ve found:
Most performance appraisal systems use either three, four, or five levels to rate performance. There are some systems that use a two-level (pass/fail) approach. There are some that use seven or nine (or even more) levels, and some that have no final rating. These are rare.
The majority of organizations in America, Europe and Asia use a five-level system.
Most managers believe (probably correctly) that they can accurately discriminate among five levels of performance:
1 = truly unacceptable
2 = in need of improvement
3 = fully successful
4 = superior
5 = genuinely distinguished.
There are advantages and disadvantages for each alternative to the number of rating levels. However, a consistent problem is that appraisers rarely use all of the levels available to them, no matter how many are offered.
Appraisers will often add plusses (+) and minuses (-) to a rating in order to increase the level of granularity without actually moving to the next higher or lower rating.
The “2=Needs Improvement” rating typically does not allow appraisers to distinguish between those employees whose performance is below par because they are new or recently promoted, and those employees whose performance is marginal and should be reassigned or terminated. Providing an opt-out rating alternative like LEARNING or INSUFFICIENT DATA or ON TARGET can allow managers to accurately assess (and compensate) people who are not yet fully successful but whose trajectory is headed in that direction.
Offering more than five rating levels actually tends to reduce the amount of
differentiation rather than increase it.
If the final performance appraisal rating is determined by averaging individual item ratings and allows the use of a decimal point, then the final rating of almost everyone in the organization will be between 3.4 and 3.6.
No matter how many rating levels are provided, the lowest level is almost never used.
Dick Grote
Thanks for the interesting post Dick.
I would add that although most organizations do use a 5-point rating scale, we see improvements in how fast and objectively managers can choose a rating by adding a long behavioural statement specific to each competency beyond a standard scale such as “fully successful”. By making it explicit what that looks like for each competency the manager does not need to spend as much time trying to work out and justify each rating.
Hi Sean thanks for including me in your great post! I appreciate it. As far as the 5 point rating scale I could not agree more that you need a behavioral statement that defines what is expected in each competency.
I also have found that inter rater reliability training for managers to get to those behaviors works well too as they are part of the process then.
Happy Holidays to you!!!
Cathy
Hi Cathy,
Thanks for the feedback. I’m a big fan of your ideas on inter-rating reliability – your blog and site are great resources on the topic. We’ve looked at several different approaches to helping ensure rating consistency/reliability for our customers, and while ideas like long vs. short rating scales can be very helpful – manager training is critical.
Best wishes for the holidays to you as well!