3 Reasons Why Performance Ratings Don't Work

performance ratings

One of the things we're known for doing here at FOT is shooting straight with our readers and telling you how things really work in HR. If you're looking for a sugar coated message you've come to the wrong place! So I'm going to let you all in on a secret…the traditional performance rating system that the vast majority of companies use doesn't work. Not only does it not work, I'd go even further and say in no particular order they are generally meaningless, tend to demotivate people, are rarely understood, poorly administered and a big fat waste of organizational time. Now I suspect there are some of you are reading this and shaking your head in extreme agreement. You can move on to the next post then. But if you don't agree with my assessment let me give you the 3 reasons why I don't think performance rating systems work…

1. Ratings are falsely precise metrics. Assigning someone a numerical rating gives the perception that the system is “data-based and objective” and often we go to great lengths to try and convince employees of the system's objectivity. Well I've got news for you – the process is entirely subjective. Yeah, you may have 10 pages of competencies to rate someone on but guess what? A real live human being is making the judgment and their judgment is subjective. Wrapping this natural subjectivity up into a number and calling it objective is at best confusing and at worst demotivating.

2. Ratings distract from what really matters. How many of you out there have ever sat through a “calibration” meeting? Wait – did I say meeting? I should have asked how many of you have ever sat through weeks of calibration meetings? The goal of most calibration meetings isn't a bad one. Striving for some consistency in how performance is assessed across a division or organization is generally a good idea. That is until you invited the performance rating to the party. In my experience most of the time is spent arguing about of each of us interprets the rating scale and questioning why someone's ratings are too high. While everyone is trying to understand what it means to be a “5″ we've missed an opportunity to talk about what someone actually accomplished. Or worse, since subjective human beings don't always agree on interpretations we just revert back to the mean (which penalizes actual top performers).

3. Ratings are a crutch for managers. The lifeblood of any successful organization lies in the ability of its managers to provide good feedback to their employees. That means sitting down and really thinking about someone's performance and offering specific examples and advice on how to improve. In the world of performance ratings a manager has the option to simply tell an employee their rating, assume they know what it means and move on. Which conversation would you prefer? It's a no-brainer yet we happily hand out this crutch on an annual basis.

Look, I understand that for some organizations performance ratings make sense for a variety of reasons. But there's also a lot of companies out that who are simply following what they consider to be “best practice” who have an opportunity to do something different. I'll talk more about what I would do in place of performance ratings in an upcoming post. In the meantime I'm curious what people have to say about “death to performance ratings!

zp8497586rq
zp8497586rq

FOT Background Check

Andy Porter
Andy Porter is a VP of HR/OD with Merrimack Pharmaceuticals in Cambridge, MA which means he works with some wicked smaaht people. Some days, he indeed does wear short shorts around the office(call it a morale booster) but it really just makes people uncomfortable. Other days, he spits some mad game on cheese. No really – he’s somewhat of a cheese aficionado. But more importantly? At Merrimack he gets to contribute his small part as an HR Pro towards improving the lives of cancer patients.

10 Comments

  1. Ken Winters says:

    I agree and would add that the traditional *annual* review compounds the problems you described because they are not timely and creates a productivity dip as managers/departments crunch through them to comply with HR’s need for objective data to provide a defense for annual performance pay increases. I’ll watch for the next post and hope to see a defensible way to give a pay for performance increases without these “data” points.

  2. You go boy. Tell it like it is, Andy.

    The only question I’m left with is “what does “work” mean in this context?” That is, “Performance Ratings Don’t Work” assumes we know what they are supposed to do.

    But what’s the purpose (or purposes) of Performance Management systems? There’s a variety of intended uses, and a variety of “communicated” purposes, which often don’t align to how they are used.

    Sometimes they are used for development, other times for high potential identification, and sometimes for advancing pay for performance, etc., etc.

    Performance Management Systems…if they were a drug, they wouldn’t be approved by the FDA, that’s for sure. They often cause more harm than good. The side effects are toxic too often. And they’re mis-prescribed and given in the wrong dose!

    Cheers to going cold turkey, or finding something better!

    Curt

  3. Sarah says:

    I completely agree and I can’t wait to read about your opinions on alternatives!

  4. Robyn Banks says:

    All of this is so true. The thing that disturbs me about most rating systems is that there is a top rating of “5″ but nobody can ever get one. Why have a system that doesn’t allow success? If you can’t get a 5, then don’t even have it. The rating system becomes a tool used to punish and discourage employees so they don’t expect a raise or a promotion. Calibration meetings are a way for top management to impose limits on ratings in order to save money on raises.

  5. Josh says:

    In some respects, I would say that you hit the nail on the head. However, to say that ratings simply don’t work is absurd. It’s nice to sit down and have an extended chat sans numbers with an employee during review time but the hard truth is that people do respond to numbers and they need some kind of rating system to understand where they sit within their position, department, and within the company, in terms of performance. I’m not talking about slapping someone with a 1 – 5 rating with no explanation. I’m talking about backing it up with specific information that will help an employee improve. The rating system is a way of simplifying the management part and it can be very effective if used properly.

    Good performance management requires a balance of both metrics and good, honest, human feedback. This is an ongoing activity – all year long. You can’t drive performance without tracking it, and generally it isn’t effective to track with words and conversations alone. Perhaps the rating system you’re using needs revamping? Without using some measure of rating when discussing performance, I can hardly justify my actions: I need to show people specifically in which areas they are required to improve and in which areas they are excelling. My rating system is based on hard data related to organizational performance. How subjective can it be?

    I’m all for breaking best practices and looking beyond the traditional approach to management, but ratings are there for a reason – sometimes it’s the treatment and delivery that makes them ineffective.

  6. Josh says:

    In some respects, I would say that you’ve hit the nail on the head. However, to say that ratings simply don’t work is absurd. It’s nice to sit down and have an extended chat sans numbers with an employee during review time but the hard truth is that people do respond to numbers and they need some kind of rating system to understand where they sit within their position, department, and within the company, in terms of performance. I’m not talking about slapping someone with a 1 – 5 rating with no explanation. I’m talking about backing it up with specific information that will help an employee improve. The rating system is a way of simplifying the management part and it can be very effective if used properly.

    Good performance management requires a balance of both metrics and good, honest, human feedback. This is an ongoing activity – all year long. You can’t drive performance without tracking it, and generally it isn’t effective to track with words and conversations alone. Perhaps the rating system you’re using needs revamping? Without using some measure of rating when discussing performance, I can hardly justify my actions: I need to show people specifically in which areas they are required to improve and in which areas they are excelling. My rating system is based on hard data related to organizational performance. How subjective can it be?

    I’m all for breaking best practices and looking beyond the traditional approach to management, but ratings are there for a reason – sometimes it’s the treatment and delivery that makes them ineffective.

  7. Josh says:

    In some respects, I would say that you’ve hit the nail on the head. However, to say that ratings simply don’t work is absurd. It’s nice to sit down and have an extended chat sans numbers with an employee during review time but the hard truth is that people do respond to numbers and they need some kind of rating system to understand where they sit within their position, department, and within the company, in terms of performance. I’m not talking about slapping people with a 1 – 5 rating with no explanation. I’m talking about backing it up with specific information that will help an employee improve. The rating system is a way of simplifying the management part and it can be very effective if used properly.

    Good performance management requires a balance of both metrics and good, honest, human feedback. This is an ongoing activity – all year long. You can’t drive performance without tracking it, and generally it isn’t effective to track with words and conversations alone. Perhaps the rating system you’re using needs revamping? Without using some measure of rating when discussing performance, I can hardly justify my actions: I need to show people specifically in which areas they are required to improve and in which areas they are excelling. My rating system is based on hard data related to organizational performance. How subjective can it be?

    I’m all for breaking best practices and looking beyond the traditional approach to management, but ratings are there for a reason – sometimes it’s the treatment and delivery that makes them ineffective.

  8. Ed Baldwin says:

    Andy, the biggest challenge I see to tossing the traditional performance management systems is what to do instead. And the answer to that question often depends on what you want your performance management system to accomplish. This has been touched on in the comments to your post – I’ve seen it used to:

    1. determine raises
    2. identify top talent and/or weed out poor performers
    3. just get managers talk with their people about “success”
    4. professional development catalyst

    Once you figure out what your Company is really trying to accomplish, then you can then build the performance management system that works for your organization and maximizes the ROI for the process. If you want it to do all these things, that’s probably a big investment of time and money. If you want it only to accomplish a real discussion then you can limit the process to 30-45 well planned minutes of conversation.

    So in the end you might end up with a three-tiered rating, or a 9-box matrix. Could be a numerical score or just a good solid performance discussion between supervisor and employee.

    The trick is working with the powers that be to have frank discussion about what you really want it to accomplish.

  9. Mihai Calin says:

    There has always been and will always be a problem with employee appraisals. The person giving the evaluation can never be entirely objective. And that is because we are only human. And when you assess an employee, you are always subject to the human factors, which are by definition flawed. People only tend to remember the real highs and lows of somebody’s performance and you tend to judge based on those.

    That becomes a real problem when you only do annual assessments, when the managers remember mostly when somebody DIDN’T do their job properly. And that is normal, because only the tensed moments at work left a mark, when a project is endangered by a certain individual action, or lack of action. The good moments are easily forgotten, because that is just what the employees are supposed to do. Do a good job. They were hired to do a good job, and it’s taken as a given when they do.

    I’ve met load of complains when poor appraisals were contested by the employees on reasons like taking 4 hours to finish a job that was only supposed to take one. And their rating dropped, because there were no mentions of the multiple times when they done what they are supposed to do faster. And that pissed them off.

    And until the appraisals system is not replaced by something not biased, by a series of tests that can determine if a person is worthy of a more substantial paycheck, we will always have this problem. Don’t take my suggestion of tests as being the right one, or the only one, but it is the only one I can think of at the moment that can improve the current appraisals system.

Trackbacks for this post

  1. 3 Reasons Performance Ratings Matter - Madgigs

Comments are now closed for this article.