No Performance Ratings? Or Is It Just HR Doublespeak?

Editor’s Note: It’s an annual tradition for TLNT to count down the most popular posts of the previous 12 months. We’re reposting each of the top 25 articles between now and January 2nd. This is No. 13 of 2016. You can find the complete list here.

Rating performance involves placing employees in different categories based on their perceived value to the organization.

If your company believes that not everyone performs at the same level, and that employees who contribute more to the company should be rewarded with greater resources and opportunities, then your company rates employee performance in some manner. Your company may not use annual performance ratings or assign numeric ratings to employees, but leaders in your company are using some method to categorize certain employees as being more valuable than others.

So the question is not whether you rate employees, but whether you rate them in an accurate, fair and effective manner.

 

I have never encountered a company that did not believe in rewarding performance, even though most struggle to do it well. I have also never encountered a company that did not rate employee performance in some manner. Yet I occasionally encounter HR professionals who say their company has eliminated performance ratings. When I hear such statements, I usually ask a few questions to see how they got rid of something that may not be possible to totally eliminate. The following describes a typical exchange:

HR professional: We have eliminated performance ratings from our company.

Me: Do you mean you got rid of annual manager ratings and shifted to rating employees through other methods such as calibration talent reviews?

HR professional: No, we have totally gotten rid of any form of performance rating.

Me: Interesting. Does your company believe there should be a relationship between employee performance and decisions related to compensation, promotions, and restructuring?

HR professional: Yes. But we do this without rating performance. Instead we have sessions to identify which employees add more impact, talent, capability and contributions to the company.

Me: How do you determine who these employees are?

HR professional: We look at a variety of things such as potential, influence and attitude.

Me: And what data do you use to evaluate those things?

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HR professional: A major part is looking at what they’ve done in their current role.

Me: So you use job performance to place employees in categories based on their value to the organization.

HR professional: Yes. But we aren’t rating their performance.

These conversations remind me of a scene in the movie This Is Spinal Tap where a guitarist claims his amp is better because its volume knobs go to 11. The interviewer notes the amp could be just as loud by increasing the volume when the knobs are set to 10. To which the guitarist responds, “These go to 11.”

A duck by any other name

Companies claiming to get rid of performance ratings are often just re-labeling performance ratings as something else. This sort of doublespeak in HR is certainly not new. This is the profession that replaced terms like “weakness” and “counterproductive” with phrases like “development opportunity” and “over using one’s strengths.” HR has a long history of changing the names of things without actually changing the things themselves.

There is some defense for doublespeak around performance ratings. Saying you are rating employee impact, talent and capability instead of rating employee performance may encourage a more forward focused attitude toward performance evaluation. After all, companies actually don’t care that much about past performance in and of itself. What they care about is what past performance tells us about likely future performance. If replacing the word performance with words like impact or talent gets people to focus on future actions and spend less time debating past results, then by all means change what you call your rating process. But please don’t pretend you are getting rid of performance ratings. You are just doing it differently than how it was done before.

 

There are big differences in how companies rate performance and the emphasis they place on performance ratings. But every company rates performance. You don’t need knobs that go to 11 to have a louder guitar amp, and you don’t need to pretend you are getting rid of ratings to have a better performance management process. Hopefully we can stop all this noise about eliminating ratings and instead focus on providing employees with honest transparent communication about how their contributions will be evaluated and rewarded.

Steven Hunt, Ph.D., SPHR, is Director of Business Transformation at SuccessFactors. Previously he was Chief Scientist at Kronos Incorporated, guides development of technology enabled talent management solutions. His experience spans many industries including retail, healthcare, dining, manufacturing, information technology, and transportation. An active author and speaker, Dr. Hunt regularly presents at conferences and has written dozens of articles for trade and peer-reviewed journals. He is also author of Hiring Success, a book published by the Society of Human Resource Management on the use of staffing assessment tools. He holds a Ph.D. in industrial-organizational psychology and a B.A. in applied mathematics.

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9 Comments on “No Performance Ratings? Or Is It Just HR Doublespeak?

  1. I think you are missing the point that some HR professionals are pulling back the curtain on supposedly “objective performance ratings” and are intentionally replacing them with more transparent and dialogic feedback focused, yes, on performance as related to goals and development. But show me an HR team that can honestly and objectively defend (with evidence) the difference between an employee’s rating of 4 and 4.3 (or whatever quasi-objective scale they’re clinging to this season), and I’ll show you a department of deluded individuals who are afraid of speaking truth to subjective power.

    1. Todd, thanks for the comment. I’m not defending the use of lousy performance rating processes – and there are certainly a lot of them out there. To the contrary, I’m excited to see so many companies rethinking how they rate performance. Part of this is getting away from overly complicated rating processes that sound accurate but generate inaccurate data. Or eliminating traditional annual rating processes and replacing them with more ongoing continuous performance feedback methods.
      The point I’m making is you can’t get rid of performance ratings completely in the sense that every company categorizes some employees as being more valuable than others. The question is not do you rate employees, but do you rate them using a process that is well defined, transparent, accurate and impactful.
      When companies pretend they are no longer rating performance then a lot of employees will start thinking the following:
      1. The company is not being honest and transparent. Every company wants to know who the high and low performers are. Pretending everyone is just as valuable as everyone else is fantasy.
      2. If they don’t rate me using a method I understand, then I wonder how they do rate me? Because I know I am being rated one way or the other.
      3. How can I control my career if I don’t know the process the company uses to make decisions that affect my career like pay and promotions? What are the rules of the game? How can I know if I’m being successful and have a secure job?
      This thought process usually doesn’t end in a happy or productive place. In particular, high performers tend to be more frustrated by a lack of transparent performance ratings than low performers. Many (but not all) high performers want to be recognized, and I suspect all high performers want to know the company is taking action so they don’t have to work with low performing colleagues. I suspect some low performers might be happy to see companies get rid of formal rating methods as it makes it easier for them to “hide in the crowd”. But the good low performers, the ones that don’t want to remain low performers and want to improve, can be motivated by knowing where they stand and what they need to do to change their status in the organization.
      Here’s one example of what can happen when companies pretend they have gotten rid of ratings. Several companies have told me stories of getting rid of their well-defined performance rating process only to discover that people started to interpret compensation adjustments as a proxy for rating performance. If a high performer didn’t get a big raise every year they assumed they were no longer valued or considered to be a high performer by the company – regardless of what their manager might say about compensation being driven by a variety of things other than performance.

      1. Steve you make the point that ‘you can’t get rid of performance ratings completely in the sense that every company categorizes some employees as being more valuable than others.’ I’d challenge you to rethink your position on this. There will be variations in performance within any group of people. As revolutionary as it may sound every company should value its employee’s equally regardless of their contribution. The minute they start trying to quantify or rank individual worth they undermine what actually makes teams perform well e.g. visionary leadership, shared experience, social capital, teamwork, diversity, agency etc. Alternatively just get robots to do the job – their performance can be easily measured and their faults cheaply repaired.

        1. Andrew, thanks for sharing this view. Based on research conducted on individual differences in human performance, as well as studies of high performing organizations and teams, I simply don’t believe everyone performs at the same level. And I do believe that companies perform better when they manage people differently based on the level of contributions they make to the organization.

          This doesn’t mean we should extensively rank or overly quantify people. Nor does it mean we should focus on “weeding out low performers”. But pretending that all employees are equally valuable to an organization strikes me as idealistic – particularly for bigger companies where there is often considerable variation in performance levels across employees.

          If you think employee performance differences don’t exist or don’t really impact company performance, I suggest reading some of the research on the topic by academic researchers such as Hermann Auginis and his colleagues. https://www.researchgate.net/publication/251550799_Why_we_hate_performance_management-And_why_we_should_love_it#pf5

          1. Thanks for the research article Steve. I agree completely with the paper’s conclusion that measuring and developing individual performance are critical determinants of organizational success and competitive advantage. The caveat is that organization have to know what to measure and how to develop individuals as well as teams. Individual performance doesn’t happen in a vacuum and neither should performance development.

            Employees operating in the same role may be doing so in vastly different organizational and social environments, a fact which performance management systems tend to ignore. Granted this is because these external factors, whilst influential as far as performance is concerned, are fundamentally dynamic making them very difficult to isolate and quantify. This is also what makes objective comparison between employees’ individual contributions difficult and in certain situations almost arbitrary.

            I do think organization are starting to recognize the important role of context when it comes to the development of employees but have a long way to go yet in terms of developing the right types of context for fostering improvement in individual and team performance.

            So really all I’m saying is I think the role of context cannot be understated when it comes to performance. The challenge is understanding it better so we can optimize its influence. And quickly, yes it does sound idealistic to say the contributions of all employees should be valued equally. But ideals are what underpin the values that organizations have recognized are worth striving for.

          2. The move to greater use of calibration reviews is one way companies can try to account for context when evaluating performance. In many of these sessions managers are challenged to discuss both what employees did, the environment in which they did it, and the challenges they had to overcome. Its not perfect but its better than just asking managers to try to judge performance in isolation.
            The contributions of all employees should be valued equally, but the actual value of employee contributions is not always equal.

  2. Rating people based on performance in a quantitative way is how management moved to evaluation of employees based on a set of criteria bases on performance and achievement, not on race, creed, color, religion, or other prejudices that could impact an employee. Moving to this form of “Non-rating” means we are allowing for the subjective ranking of employees that proved a failure 20+ years back. That failed subjective model allowed people to move in organizations and succeed based on the beliefs (work related and external) based on their manager’s belief structure. This new subjective model can work when people are trained and believe in real-time feedback, equal and fair treatment, but sadly not everyone embraces a color, gender, sexual orientation, religious brave mantra focusing on hiring and promoting only the most qualified people. The, failure of performance reviews, is a cultural and management failure. Culture failure because we have a generation that believes everyone deserves a trophy as a child. Criticism is not acceptable because it shatters the fragile psyche of the younger generation. Management failure because new leaders lack the courage to have difficult discussions real-time. Stated in my not so humble opinion… Thank you for posting this, as I understand it goes to 11.

  3. I see the point here, but organizations who are shifting from rankings are doing so, in most cases, in response to research that demonstrates rankings reinforce a fixed mindset, often do not support development, not to mention the irrelevance of a review that dates back 12 months. Real change comes from cultural change that supports not only review and learning of short term quarterly objectives, but ‘held’ with a mindset of development and present and near term future achievement. This type of shift is being invested in, learned about and will continue to evolve. Not crazy about the comment of HR being responsible for words like “counterproductive” or “developmental,” as if they were responsible single handedly for cultural attributes that reward or not…just has not been the case in my experience…oversimplified.

    1. Susan, thank you for the comments. It may be important to clarify the difference between ranking and rating. In particular, the use of extreme forced ranking requiring that two employees cannot be rated the same. From my experience such use of forced ranking is very rare, particularly in comparison to how often people criticize it. Many people in the ratings debate appear to be complaining about something that almost never happens, sort of like politicians who claim about voter fraud . That said, I’m glad its not used widely because there are very few if any situations when extreme forced ranking is effective and many when it is very harmful. But getting rid of forced ranking is not the same as getting rid of ratings entirely.

      I agree with you that there is diminishing value in ratings collected in the distant past (which in today’s world just might be defined as 12 months ago!). But the answer to this isn’t to try to get of ratings. Its just the opposite. Companies should strive to make performance assessment a more continuous process so ratings reflect an ongoing record of performance.

      Regarding Dweck’s theory of fixed vs malleable conceptions of ability, while I’m a huge fan of her work one might argue that concerns about people falling into a fixed mindset may be more of an issue when working with children who have a more limited understanding of their self-capability as opposed to adults whose self-conceptions are more well-established (Dweck’s original research and theories in this area were based on youth learning and development). Plus competition is very powerful motivator for many people. I personally believe that people who achieve the pinnacle of performance tend to have both a fixed and malleable/learning concept of their ability. I’ve never met a top performing scientist, business leader, sales person, engineer, or athlete who didn’t 1) believe that they could always be better through more effort and 2) who had some interest in benchmarking their accomplishments and achievements against those of their peers who possessed abilities and skills they respected.

      Overall, performance assessment and rating is a complex but critical issue. Its complex because we are constantly struggling to do it better. But its also critical because it has a major impact on employee well-being and organizational performance. The reality of performance rating is it is something we need to manage and improve, not ignore it just because it is difficult to do well. In sum, we need to adopt a learning orientation toward performance ratings, not a fixed one (ha ha)

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