Rating Employees is Archaic?


iStock_000024086772LargeSo how’s that annual performance evaluation process working for you?

According to new research on the psychology of work from David Rock, typical numeric ratings, rankings, and formal evaluations, without meaningful feedback, can result in reduced performance. It seems the research now proves that the annual rating exercise may do more harm than good.

The lengthy, complex, calculated performance evaluation is under attack. Motivated by a desire to simplify overly complex processes and to ensure the annual ritual is meaningful, many organizations are searching for a simpler approach. According to the Global Human Capital Trends 2014 report by Deloitte, only 8 percent of organizations believe their performance management process is worth the time invested.

In response, Deloitte is leading the charge with a complete overhaul of its performance management process, as described in the April 2015 edition of Harvard Business Review. The new approach focuses on weekly check-in meetings and throws out the five-point scale.

Deloitte is not alone. The latest surveys show that seventy percent of organizations reworked their approach to performance management in 2014 and even more are expected to take on the challenge this year.

If your organization is part of that large group seeking change, here are several factors to consider:

  • Ask Why. Before you start to tweak the form or install an automated solution, it’s critical to clarify the purpose of your performance management efforts and the outcomes you are trying to achieve. Are you trying to facilitate communication? Align employee performance with organizational goals? Differentiate performance to determine compensation? Develop a talent pool prepared to meet future demands? Deloitte identified three primary goals: recognize performance, see performance clearly, and fuel performance.
  • Develop Skills. Regardless of the purpose of your performance management system, the implementation of it cannot be automated. Performance coaching and development will be a critical part of the process. If your efforts to retool your approach to performance management don’t include developing coaching skills in your managers, you are missing the point.
  • Ditch the Numeric Ratings. Complex, numeric performance evaluations are a thing of the past. Today, it’s more important to give people feedback to help them improve performance. The annual “grade” only shifts the focus from the performance to the rating itself. Organizations are moving to more descriptive, values-based scales or eliminating the rating process altogether and instead focusing on feedback.
  • Separate Pay From Performance. Instead of linking pay adjustments to a numeric “grade,” the trend is to separate these two activities. Doing so allows performance conversations to be focused solely on the performance, rather than the rating. Heck, you may not even want to call it an evaluation or appraisal any longer. Instead, it’s performance feedback. Pay adjustments then are based on a variety of factors including individual contribution, organizational performance, customer impact, skill scarcity, and the market demands.
  • Automate with Caution. The marketplace is cluttered with software vendors seeking to improve your performance management process through automation. Don’t be fooled into thinking that a technology solution will ease your woes. While some of the tools available are great solutions for feedback preparation and reporting, none of them will manage the employee’s performance for you. The real work of performance management will always rest with managers and supervisors who guide employee work each day. Focus on them, rather than the trappings of technology.

Retooling your performance management system is a big undertaking. It usually implies a culture shift that will take time, energy, and intestinal fortitude. Tweaking the form will not likely create the results you are dreaming of.

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