There remains a lot of confusion in corporate America about how annual performance review scoring works. That’s evidenced by a whole host of outcomes that don’t particularly serve the company’s or the employees’ best interests:
· Grade inflation comes into play because managers find it difficult to be honest with workers about their performance, resulting in higher scores than are otherwise deserved.
· Certain managers simply give their direct reports the same score (and narrative) from the year before, almost in a “copy and paste” mode, so that workers become disgruntled that the organization and their immediate manager think so little of them and their career and professional development.
· Some managers refuse to award the highest score possible out of principle—for example, Exemplary Performance—withholding acknowledgement and recognition of employees’ achievements and/or extraordinary efforts.
· Some managers grade everyone in the middle—for example, “Meets Expectations”—without differentiating between truly top performers and those that deliver less than stellar results.
· Some employees refuse to complete and submit their own self-reviews in advance of the annual meeting with their boss, missing a key opportunity to highlight their accomplishments, invest in their own professional goals and individual development plans, or otherwise engage proactively in their manager’s assessment of their contributions to the organization during that review year.
Clearly, what we’re doing isn’t necessarily working to our benefit as organizations or employees. Understanding how scoring works is a great place to start in terms of aligning your management team across the enterprise and ensuring a consistent experience among staff members.
A Sample Performance Appraisal Rating Scale with New Performance Definitions
Your organization may currently rate employees on a 5-point rating scale that looks something like this:
(5) Exceptional Performance
(4) Exceeds Expectations
(3) Meets Expectations
(2) Partially Meets Expectations
(1) Unsuccessful Performance.
In comparison, a 3-point rating scale might look like this:
(3) Exceeds Expectations
(2) Meets Expectations
(1) Fails to Meet Expectations
Both of these 3- and 5-point scales are common, so don’t be surprised to see your organization using something close to what you see above. The key question is, how do you determine who falls where within that spectrum of overall scores?
Just for fun, we'll use a 4-point rating scale for the remainder of this exercise. And while we're at it, you might want to rethink some of the tired terminology above that’s been used for decades and that leaves most workers feeling unmotivated. For example, the “Meets Expectations” designation equates in many employees’ minds to the grade equivalent of “C” in school. “Fully Successful Performance,” on the other hand, sounds a lot more positive and is something to be proud of and celebrated. We’ll suggest some new category phrases below that you can consider using company-wide or simply with your team going forward.
Next, you’ll likely notice that the descriptions that immediately follow those definitions on your company’s current appraisal template are not clear or well developed. You can consequently build the following definitions into a revised and enhanced template at your organization if you so choose:
(4) Exceptional Performance
Clearly and consistently demonstrates extraordinary and exceptional achievement in all major areas of responsibility. Others in similar roles rarely equal performance of this caliber.
(3) Superior Performance
Performance is continually and consistently superior and regularly goes beyond what is expected. Performance frequently exceeds expectations.
(2) Fully Successful Performance
Performance consistently fulfills the critical requirements and responsibilities of the position to the expected standard and demonstrates achievement, competent execution, and meaningful contributions to the team and organization’s overall objectives.
(1) Unsuccessful Performance
Performance does not consistently meet or may occasionally fall below what is required of the position. Improvement in specific areas may be required and immediate and sustained progress is mandatory.
Clarifying New Rater Definitions and Interpretations Using Clear Benchmarks
With these documented clarifiers in hand, it becomes time to map out what these revised scoring categories mean, how they should be interpreted, and how they can be used to drive stronger productivity going forward. The descriptors that follow should not be published on your template; instead, these are talking points for managers to consider when scoring employees’ performance and may be shared verbally with employees during program rollout:
Exceptional Performance
Generally considered the top 5% of all employees in this classification.
From a succession planning standpoint, is ready to step into superior’s position right now (without the need for additional time in role or training).
Extraordinary circumstances may have been involved during the review year (for example, special projects that garnered organization-wide attention) that may justify a rating of this caliber.
Superior Performance
Generally considered the top 20% of all employees in this classification.
From a succession planning standpoint, may be ready to step into superior’s position in one to three years with additional training and organizational exposure.
Extraordinary circumstances or special projects may not have been available during the review period.
Fully Successful Performance
· Category 1
Consistently performs well and is reliable, courteous, dedicated, and efficient.
Works hard and looks for opportunities to acquire new skills but doesn’t necessarily perform with distinction. Solid communicator and team player; dependable, accountable, and willing to help.
· Category 2
Consistently performs well but may be challenged in particular performance areas.
May perform well because of tenure in role and familiarity with workload but does not appear ambitious about learning new skills, expanding beyond comfort zone, or helping others. Conduct at times may be problematic and may experience challenges working on a team.
Unsuccessful Performance
Performance generally falls below the minimum standards and expectations of the position. May not be able to demonstrate and sustain consistent improvement.
May perform well but conduct is so problematic that it invalidates the entire year’s contribution.
May have received significant progressive disciplinary action during the review period.
Position may or should be in immediate jeopardy of being lost, and a 90-day PIP (Performance Improvement Plan) is required to recalibrate the individual’s contribution to the organization at that point in time.
3 Steps to Accurate Employee Scoring: A Simple Exercise for Annual Performance Review Scoring
Now it’s time to play with this new tool. For Step 1, list the names of your direct reports in descending order in terms of who demonstrates the strongest to lowest performance. Don’t think this through too deeply at this stage: simply go with your gut. (You can change this ranking order later as you continue refining your selections throughout the exercise.) The list of your six direct reports might look like this:
1. Debi (Strongest)
2. Hannah
3. Raul
4. Roland
5. Sylvia
6. Saleem (Least Strong)
Okay, easy enough. Now, for Step 2, write one detailed sentence next to each person’s name to justify why you ranked them where you ranked them, like this:
Employee | Justification |
|
|
Debi | Very proactive thinker, willing to coach others, adapts well to change and sees herself as an early adopter, friendly and uplifting personality. |
Hannah | Exceptionally hard worker, great technician and master of a systems, my go-to person for anything complex that requires deep analysis. |
Raul | Strong contributor, great sense of humor, but definitely expresses limits in terms of what he’s willing to do/not do; can be moody and passive-aggressive at times. |
Roland | Performs consistently due to longevity in role but shows little initiative to learn anything new; resists training or mentoring others; often wants to be left alone to simply do his work without interruption. |
Sylvia | Tends to be very resistant to change; comes across as overwhelmed and bitter much of the time. Provides poor customer service and generates complaints regarding her gruff communication style. |
Saleem | Not included in this exercise because he’ll be leaving the organization in the next month when he relocates to a new city. |
Finally, Step 3 asks you to place each of your six direct reports into the following rating categories:
Exceptional Performance | Debi |
Superior Performance | Hannah
|
Fully Successful Performance | Raul Roland |
Unsuccessful Performance | Sylvia |
Note that Saleem is left out of Step 3 because he’ll be leaving the organization soon.
Rating Scale Tips
First, this exercise helps you rank order your employees according to your gut level impression of their overall productivity and performance. It then asks you for a detailed sentence that justifies your initial recommendation and classification. Finally, it maps your people to a scale that demonstrates your ability to assess talent accurately. You’ll note that:
1. You didn’t put everyone on your team in the “Exceptional” category, which is a mistake that many managers engage in to avoid confrontation or to simply replicate the score awarded the previous year.
2. You didn’t simply place everyone in the middle “Fully Successful” category, and you thereby did a more responsible job assessing and differentiating talent.
3. You’ve created an initial justification for your talent assessment scores that you can discuss now with your boss to ensure you’re both on the same page before any writing exercises begin. (This can save you lots of writing time in the evaluation preparation phase.)
4. You’re ready to engage in “calibration” discussions with your peers, if your company engages in those practices. Calibration meetings are designed for each area head to list their direct reports on a simple one-sheet like this and then ask peers in a large group setting to assess those initial rankings. For example, in an HR setting, the CHRO invites the heads of the various functional areas—Talent Acquisition, Compensation and Benefits, Talent Development and Training, Employee and Labor Relations, and the like—to discuss their assessments of their own team members. After each team leader does a quick overview of their initial staff rankings, that individual then invites feedback from the rest of the leadership team in the room to share their experiences with those individuals listed in order to confirm or otherwise challenge the ranking. (After all, some people manage upward much better than they manage across the organization, and your peers can share insights into what may be happening with one of your employees that you're not aware of.)
5. You’re likewise ready to develop data and context for your original designations by researching your justification for each score award. For example, what did Debi do to earn that “Exceptional Performance” designation? Is she ready to step into your shoes now if you were to leave the organization (without the need for more time in the role or additional training)? Did she face exceptional circumstances that truly allowed her to stand out among her peers (for example, by receiving an Employee of the Month/Quarter/Year award)? Are you comfortable arguing that she is truly in the top five percent of all performers in her specialty area?
It all falls together seamlessly when you approach this as a “back of the napkin” exercise. It’s simple, transparent, and honest. And that’s what’s missing from many organizations’ performance management programs these days.
What historically gets in the way is resistance to change or a potential problem with perceived “fairness” if one manager ranks employees lower than others. That's why discussing recommended scores with your manager and/or peers is so important: it automatically realigns expectations surrounding performance, achievement, conduct, reliability, and so much more. Simply put, the best way to gain consistency in scoring your employees stems from sitting around the proverbial campfire and discussing your expectations and experiences.
When done correctly, you'll be transitioning the concept of “performance management” from a static noun to an active verb (i.e., via its ongoing communication with goal sharing, recognition for a job well done or extraordinary effort, and constructive feedback to help employees master their craft and learn their trade). That's where the culture change comes into play, and that's where you have an incredible opportunity to help your employees find new ways of motivating themselves.
HINT: When done correctly, “performance management” should occur in quarterly, not annual, intervals. The annual roll-up is a scorecard or annual report of sorts, but the actual work gets done throughout the year in quarterly meetings. The script that follows might be a good place to start with your team, department, or division.
Communication to Staff
Your staff communication might sound like this:
“Everyone, I want to take the opportunity to ‘reintroduce’ our performance management program, and this year’s annual performance appraisal window is the optimal time to do it.
“Up to now, we’ve held annual reviews in the fourth quarter of the year. That timing won’t change, but I want to map out a new way forward that will benefit both your career and professional development as well as our results as a department and organization.
“From now on, I want us all to think about the ‘annual’ review happening four times a year, not once. I’ll ask you to schedule time on my calendar quarterly and to prepare the agenda for the meeting. My job will be to listen and coach. I’ll forward you a checklist separately of things that we can discuss during that meeting, but for now, understand that I’ll want to hear about how you’re doing performance-wise, what you’re working on in terms of your career and professional development goals, what type of additional training you might need, where you may be facing challenges or roadblocks, what you feel would work best for our team to perform at a higher level, and more. But again, you set the time on my calendar, and you set the agenda for the meeting.
“We can discuss whatever’s important to you at that point and whatever I can do to help. This way, when we get to next year’s annual review at this point in time, it will be more of a quick lookback at what we’ve already been discussing throughout the year. We can focus more on your future and the goals you’re setting to excel in your career, which is a much easier and more productive approach to focus on during the annual performance review window.
“Note that you won’t have to prepare anything in writing for the quarterly review: it can simply be us sitting down to talk about the current state of the state, how you’re doing and feeling about your work, and the like. You’re likewise more than welcome to bring in completed self-assessments, productivity graphs and charts, letters of recommendation, or anything else that you feel is important to share with me at that time. But these aren’t typical discussions we have throughout the year on the shop floor: this is dedicated time for your career and professional development.
“As a second point, we’re upgrading the way we interpret scoring during the performance appraisal process. When I began here three years ago, I noticed that the organization tended to engage in what’s known as ‘grade inflation,’ meaning that most employees were assigned the highest performance review scores available, almost without exception. That’s not realistic, it’s not in sync with leadership best practices, and it holds back employees in terms of their career and professional development because there’s little room to grow and few goals to set if you’re graded as outstanding, amazing, and the best thing since sliced bread every year.
“We want to assign more realistic grades this time around. We want to bring the whole organization to a standard baseline of "Fully Successful Performance," and adjustments for higher or lower scores can be discussed and justified from there. This way, we're all starting from the same launching point--a "clean slate," of sorts. Employees will hopefully gain a clearer understanding of their roles and contributions and, more importantly, can then focus on developing new muscle and goals around their performance, conduct, collaboration, agility, innovation, teambuilding, and more.
“That’s where you come in. . . I’m going to explain how we’re interpreting the scores in just a moment, but please don’t think that we believe you’re doing less of a job than you’ve done in the past if you received an ‘Exceeds Expectations’ score last year and are only getting a ‘Fully Successful’ score this year. We’ve changed the descriptors, we’ve upgraded the criteria, and we want this year to be a transition period where this new performance management program can take root.
“For the most part, everyone’s scores will be realigned with the new criteria that I’m about to lay out. And while this is the first time that we’re adopting this new approach to scoring assessments and distributions, this should become our new normal going forward. We want to become known as a performance driven and continual learning organization, but we want to start with the basics first by explaining our logic and revised approach to performance management. Allow me to describe how we’re interpreting the various performance rating categories so you can give some thought to this before we meet one on one to review your results.” [You can then share the top 5%/20% concepts, the succession planning "ready now" versus "ready in 2-3 years" logic, and the like.]
Mission accomplished: You’ve set team expectations to take a renewed look at the entire performance management program, introduced the new scoring strategy and philosophy to your staff members, and placed yourself in the role of career mentor and coach (rather than unilateral decisionmaker and disciplinarian). You can then make yourself available to employees who might have challenges codifying their contributions or who otherwise might take offense at any score less than an Exceptional ranking. (Note that once they hear that the highest ranking requires them to be in the top 5% of their peers and be ready to step into your role immediately from a succession planning standpoint, they’ll likely back off their demands fairly quickly.)
Overall, you will have realigned the performance management program to reflect reality while also making room for employees to focus on their career and professional development. That’s a very healthy start to creating and sustaining a true pay-for-performance culture and opens up potential opportunities to introduce succession planning, high-potential, and emerging leader programs along with stronger retention and employee recognition opportunities.
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Excerpts from this article are taken from Paul Falcone’s book, The Performance Appraisal Tool Kit: Redesigning Your Performance Review Template to Drive Individual and Organizational Change. Paul is also the author of 2600 Phrases for Effective Performance Reviews, 2600 Phrases for Setting Effective Performance Goals, and Leadership Offense: Mastering Appraisal, Performance, and Professional Development (HarperCollins Leadership and AMACOM Books).
For more information on Paul's books, please visit his #HarperCollinsLeadership author page at https://www.harpercollinsleadership.com/catalog/paul-falcone/.
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