Recent Trends in Human Resource Management

Saturday, September 5, 2009

Performance Management: Poor Ratings

Is rating better than ranking?

. Organisations believe that rating employees is a better way of evaluating their performance

. However, experts reckon that rating is just a euphemism for ranking

Ranking employees makes performance evaluation easy. It is also a simple way of identifying how an employee is performing in comparison with his peers. But this method of evaluating performance is not very popular with employees. Though employees do not mind comparisons, trouble starts when they lose out on assignments and promotions based on such comparisons. Since the consequences of such comparisons or ranking can be damaging, most organisations have discontinued the practice, and instead, opted for rating their employees. But, is rating any different? Although the popularity of rating systems indicates everything is hunky-dory, all is not well in paradise actually. This week’s mailer takes another peek into rating systems to determine their true worth as performance management tools.
The difference
Unlike rankings, where an employee’s performance is graded in relation to the performance of others, in rating systems, performance is compared to a set of pre-determined criteria, where the employee scores a letter or a number that represents his level of performance. In ranking, since an employee is pitted against his colleagues, not everyone gets to be a top performer, or number one. In the rating system, everyone can get high grades if they deserve them. With a rubric dictating how employees should be graded, rating is said to have evolved into an objective and reliable performance measurement tool, which explains its popularity.
Truly worthy?

Are rating systems really worth their popularity among both employees and organisations? Here is an evaluation:Objectivity: It is necessary to grade employee performance in an objective manner. Do rating systems allow for true objectivity? For instance, an organisation has the following criteria and employees are graded on each parameter on a scale of 1 to 5, the best being 5:

1. Job knowledge: The ability to assimilate and evaluate job-related information.
2. Planning: Adapting to changing work demands, using efficient measures to address work concerns.
3. Quality: Maintaining high standards of accuracy and completeness.
4. Initiative: Resourcefulness, innovation and the ability to be a go-getter.
Even though the parameters are pre-determined, its components such as high standards and ability to be a go-getter are open to interpretation. If achieving 80 percent is a high standard for one manager, it can be 90 percent for another. Thus, a better performer and a lesser performer will find themselves in the same bracket. Although employees do not complain about it, organisations stand to lose when they fail to identify their top performers.
Development: A primary function of performance appraisals is to identify an employee’s improvement needs. Learning professionals are of the opinion that rating systems are least indicative of developmental areas. For employees to learn and develop, they need to know the areas in which they fall short, by how much, and what they can do to improve themselves. Managers might argue that rating an employee low in an area indicates his improvement need. However, it does not work that way. For instance, an employee scores 2 on the ability to evaluate information. Although, an area of improvement has been identified, how can one convert a score of 2 into learning requirements? Moreover, to an employee, all that the score conveys is that his manager is dissatisfied with his performance in that area. It does not answer the following questions:

. What should I do to improve my score?
. Is the score truly indicative of my inability to evaluate information, or is it just that my manager thinks that way?

Moreover, an employee, who has been given a score of 4 for the same ability by another manager earlier, will not take the score of 2 seriously. Employees who sense even a bit of bias are unlikely to give any importance to low scores.
A performance management tool must act as a true talent advocate. Additionally, employees must benefit from its assessments. But rating systems only appear to be objective. With the parameters for ratings defined loosely, a low score may not be the correct assessment always. For employees who have received top ratings in the past, a sudden low score will result in disgruntlement. Also, to some employees, a score of 3 on a scale of 1 to 5 is nothing to worry about. This, however, may not be the way the manager interprets the score. For instance, an employee is given a 3 for his ability to be a self-starter. The employee may think of this score as satisfactory. However, to his manager, nothing below 4 is acceptable. Now, when this employee is not given an opportunity to work on an upcoming project, he will be wondering why. He will question the manager’s ability to assess objectively and constructively.
Is there an alternative?
Ratings may not be a great improvement over rankings. They only expose the weaknesses in such performance evaluations. The following are some of the recommended approaches to improve things:

. Use incident reports where an employee’s reaction or response, in a simulated or a real-life situation, is reported
. Define measurement criteria strictly, leaving no scope for interpretation
If rating systems are subjective, and least indicative of an employee’s areas of improvement, how can they help in performance management? Asking questions like this is important to be able to choose the right performance management tools.
Reference:The ManageMentor


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