The Question Doesn’t Have to be “to Numerically Rate or Not to Numerically Rate!”
People sometimes say it’s a Fool’s Choice when you feel as if you only have two options. The argument about performance appraisal ratings seems to fall into that category, but there are always other options. Let’s get away from the limit of two choices and explore a few scenarios around ratings. As you review these descriptions, focus on your organization’s culture and what might be a good fit.
Some organizations are opting to eliminate traditional ratings during their annual performance appraisal process. How can your organization know if that will be a move that would drive the business results you are looking for? The short answer is — you can’t. You must know your culture and the possible unintended consequences of turning off ratings. But what you do with your ratings doesn’t need to be binary. There are options within the “ratingless continuum” that might be better for your organization, especially when it comes to merit increases. The ratingless continuum includes a variety of options around how ratings may or may not be used in performance appraisals.
Another thing to consider is that it is very possible that ratings aren’t your bottleneck. If that is the case, your attention should be on some other aspect of your performance management process. Let us help you explore a few of these ideas.
In a traditional performance management process, both competencies and goals have numerical ratings. Typically, the goals and competencies have thoughtfully selected weights, which determine how much each individual competency and goal contributes to the final rating.
On one end of the continuum, your organization may opt to completely turn off numerical ratings and compile strictly qualitative information about an employee. The benefits of removing ratings may range from increasing the sentiment of a more relaxed workplace to giving managers the ability to cover a wider variety of topics. However, limiting yourself to non-numeric data does preclude you from being able to use that data in analysis, because there are simply no metrics to analyze. Still, those characteristics may be perfectly acceptable at your organization.
On the other end of the ratingless continuum, an organization may only collect quantitative data about an employee. Typical examples of that type of data would be sales revenue, customer satisfaction scores or percent-to-budget completion rates. Though it isn’t the only type of data that can be captured with ratings, quantitative data is best suited to some sort of numerical rating. Quantifying results gives you immediate visibility of your top performers, which enables you to look for trends and insights. In contrast to qualitative data, this quantitative data runs the risk of leaving out intangibles or harder-to-measure benefits of an employee's contribution to your team.
Another option in the ratingless continuum is to include ratings only for SMART goals. Some organizations use that process in order to capture unarguable quantitative data such as sales numbers, billable hours or customer service ratings. It is often looked at as safe to discuss these numbers with employees in an annual review because 1) the employee should already be aware of these numbers throughout the year in order to work towards goals and 2) these are factual data points that are absent of potential manager bias. Some organizations that use ratings only on their goals opt to discuss soft skills, such as communication or creativity, outside of the rated portion of the appraisal, such as in the Summary Comments section. In such cases, performance of the soft skills wouldn’t usually count toward the final rating.
Sub-Competencies for Softer Ratings
Some organizations want to measure competencies by measuring sub-competencies. For example, an organization may be interested in an employee’s ability to communicate and consider distinct parts of communication, such as written, verbal, non-verbal and listening as different parts of the holistic communication competency. We will often see organizations rate each of those sub-competencies, then have those scores combine to give an overall communication rating.
Some organizations may feel like that process is too rigid when that score is left as is. That feeling of rigidity is really subjective and depends largely on an organization’s culture. HR professionals should be sensitive to the importance of culture in determining an effective performance management process. If your organization did feel the outlined process was too rigid, perhaps you opt to rate each of the sub-competencies but then give managers the autonomy to override the calculated score to account for any other variable they might consider important. By doing so, even a formalized rating process can take on some of the flexible components of a ratingless review.
Some organizations use shadow ratings, which help managers quantify an employee’s performance without allowing the employee to see the actual rating. This process can reduce the subjectivity of an appraisal, and reduce the risk that an employee is demoralized by a numeric rating. Instead, they may see “Valued Performer” or perhaps no label at all. This way, the rating stays hidden.
The Real Performance Management Bottleneck
It is argued that ratings can leave employees feeling demoralized. It is vital that organizations understand how much of the negative reaction to performance appraisals is due to numerical values being seen next to an employee’s name and how much of it might be due to dissatisfaction with the way the manager presented the feedback, or to some other variable. It is very possible for two, near identical employees to receive the same performance rating and feel polar opposite about it depending on how a manager presents the message and inspires (or demotivates!) an employee during the process. For many organizations, the debate about rating/ratingless reviews is nothing but a distraction. The real bottleneck is the manager’s struggle to give constructive feedback. Poor managerial soft skills can adversely affect any performance management process regardless of whether ratings are used or not.
Don't allow the conversation about the absence or presence of numerical ratings distract you. It is very likely it is not the real bottleneck to improvements in your organization’s performance management practices. Here are a few things you should consider.
Do Your Managers Know How to Give Feedback the Right Way?
If a manager doesn’t know how to give feedback in a constructive way, it doesn’t matter if you are using ratings or not. That employee will likely walk away from the experience feeling negatively. It can be very difficult to change the way individuals provide feedback, especially in an environment where giving positive feedback is not a cultural priority. But if the ability to give feedback is the constraint in the process, you should start there, strategically getting support as you try to change the tide.
Are Managers Giving Feedback Regularly?
Feedback should be given regularly. Managers and employees should have emotionally safe environments where insights can be shared. Encourage your managers to schedule regular check-ins with their employees. Offer to help wordsmith constructive conversations for specific scenarios they are facing. Preparing for those conversations can be critical. Learning a few simple tips about constructive feedback is sometimes all that is needed to help a good manager go from good to great.
Are Goals Cascaded and Clear?
Employees want clarity. Have well planned SMART goals that link to the main objectives of the company or division. Encourage managers to articulate that connection. The research shows that when an employee understands how his or her goals affect the organization, they are more engaged at work. Increases in engagement are positively connected with decreases in turnover, increases in customer satisfaction and increases in ROI. Effective goal setting is one piece of that puzzle.
Have an Application that can Change When Your Needs Change
Use a rating-agnostic application that will let you turn ratings off or on with just the click of a button, and can also allow you to implement any of the other options discussed above. With the right technology, as your organizational needs change, your technology can change right along with you. But remember, turning ratings on or off is the easy part. Deciding which strategy to pursue is the tricky part. Talk with a consultant who is well-versed in this space to help you make objective decisions about what direction will best serve your organization.
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