Want the Performance Reviews You Write to Have Fair Ratings? Take These Three Steps

It’s no secret that most people aren’t happy with performance ratings – the kind you get on a performance review. Ratings are subject to biases like the recency bias – the notion that what’s been happening lately will keep happening. So that could be part of it.

But I suspect what people mainly object to is that ratings often seem to be arbitrary. Worse, people rarely know what the rating’s going to be until they get their evaluation. And of course, while the rating appears unambiguous – numbers have that effect – what the number represents is not. There’s a lot of judgment behind that number.

In the past few years, employee dissatisfaction has led some companies to remove ratings, hoping that would improve performance discussions. It didn’t. Treating a symptom as if it is the actual problem rarely is effective. Research shows performance discussions became less frequent and less effective.

Apparently, having to compare performance against some standard and arrive at a rating, forces managers to think about employee performance and helps prepare them to discuss it. But knowing that ratings serve a useful purpose doesn’t necessarily change the reason(s) employees don’t like ratings.

If Ratings Are Here to Stay…

There is no guarantee every employee will perceive their performance review and rating as fair. But there are at least three things any manager can do to make it more likely.

I take guidance from the Cambridge English Dictionary definition of fair: “treating someone in a way that is right or reasonable.” Receiving a rating that seems arbitrary is neither right nor reasonable.

The three actions are:

1. Make the performance rating solely about performance
2. Be clear about your expectations – what you can count and what you can’t
3. Remove the mystery – include a discussion of the rating during regular performance conversations throughout the year

Make the performance rating solely about performance

A credible performance rating is one that is only about performance. That sounds obvious. But unfortunately, the performance rating often is linked to the end of year pay decision: a 3 gets a certain amount; a 4 gets a different amount, etc. This is supposed to be “pay for performance.” Actually, it’s the opposite: ratings often are adjusted to reflect the intended pay decision. This works for the compensation system, but it’s only sort of about performance.

For many jobs, pay is contingent on factors other than performance; there is the salary pool and where the individual is in the salary range. Even the organization’s compensation philosophy has an impact. I recently spoke with someone who works in a large organization that forces managers to grade their employees on a curve – the less “scientific” term is forced ranking. Grading on a curve might work if all employees were together in the sample population. But they’re not. Almost every unit regardless of size does this separately. (One-person units are rolled up into the next higher unit or an adjacent unit.)

As I have written elsewhere, there are other problems with “pay for performance.” But the main point is that very few jobs exist where there is a direct relationship between pay and performance. A performance rating should be about performance; nothing else.

Be Clear About Your Expectations

The rating should reflect how well an employee has met performance expectations. These expectations can cover a lot of ground. There might be specific goals that can be measured easily related to revenue or budget, handling a certain number of customers or maintaining quality levels, etc.

But performance also is assessed on areas like discretionary effort and interpersonal skills like dealing effectively with difficult people, helping others, etc. Often, we are most aware of the second group when these behaviors are absent.

Being clear about expectations means being specific when possible, identifying desirable behavior, and provide examples. A discussion is essential to ensure that both manager and employee have a similar understanding.

It’s likely some of these expectations will evolve during the year – business conditions might change, for example. If/when something happens, the manager should discuss it with his/her employees and reset expectations.

Remove the mystery – talk about it during regular performance discussions

If the manager has regular performance discussions with his/her employees, the manager also should discuss the possible rating as part of that process. There is no reason not to if the rating is only about performance.

This will be useful because it gives the manager and employee a chance to calibrate; that is, the manager will get a better sense of how the employee views things and vice versa. If this discussion occurs every quarter, the rating should not seem arbitrary or be a surprise – whether it is high, low or somewhere in between.

Your Take Away

A manager increases the chance that the performance rating he/she gives on a performance evaluation will be perceived as fair if that manager does these three things:

• Make the performance rating solely about performance – disconnect it from other factors like the annual pay decision
• Be clear about expectations – those things you can count and those you can’t
• Remove the mystery – include a discussion of the rating during regular performance discussions throughout the year