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The Annual Performance Rating: What it is and Why It SucksBy Matt Stephens
Annual performance ratings have an oddly apt analogy with computer game reviews. When a computer game is released, it goes without saying that a serious amount of work has gone into it. Teams of programmers, designers, graphics artists, testers and so on, have given mind, body and soul to this product for well over a year. Then some magazine gives their magnum opus a silly little rating out of 10. A year's worth of blood, sweat, tears and life is whittled down to a single digit. The games producers must love these magazines for that. In the world of games journalism, the "overall rating" is just about justifiable, because it isn't intended for the games creators; it's intended for the games buyers, who are faced with a relentless army of new titles every month. Information reduction for these people is necessary and useful - reducing each game to a summary line and a single score, so that they can zero in on the games they really want to buy. Unfortunately, the same approach just isn't suited to annual performance ratings. In this case, the rating is intended for the person who's been giving blood, sweat, tears and life for a year. So reducing this herculean effort to a brief summary and a single-digit score violently trivialises the employee's efforts over the past 12 months. The result is dehumanising, demoralising, de-lots of other things. Now we segue somewhat startlingly and ask you to take the Vogue self-test: imagine the best orgasm you've ever had. What rating would you give it? The satisfaction you get from an annual performance rating is nowhere near that level (even when the performance rating is a good one). And yet it's the culmination of an entire year of hard graft and sweat. It's hugely anticlimactic.
Of course, the performance rating is normally linked directly to an annual bonus: and as we all know, there's only one thing better than a good orgasm: money. Unfortunately, linking the performance rating with a bonus introduces its own set of problems. Inevitably, the rating will be run past the company accountant before it's approved. The line manager might say "This person worked his butt off, he deserves at least 9/10." But the accountant might reply, "We're over-allocated; reduce his rating to 6/10." The manager has to shoehorn the appraisal around the allowed bonus rather than the other way round. I've had it happen at several different companies for people on my team. The result is that the performance rating (already a dodgy method) no longer fairly represents that person's performance over the year. Result: the person gets demoralised and searches for a company that he hopes will appreciate his talents a bit more. The Solution There are two realistic solutions that I can see; both are actually pretty straightforward. But the first is easier to introduce into a company that is culturally fixated on performance reviews and all the crap that goes with them. Quite simply, don't link performance ratings directly to performance bonuses. If the company must take this approach, create two ratings: one is the "employee-facing" performance rating (9/10). The other, which the employee doesn't get to see, is the "accountant-facing" bonus rating (7/10). Nice and simple. The employee doesn't get to know what bonuses the other employees are getting, so he doesn't know whether he's been swindled - therefore he doesn't have any reason to get disgruntled. The performance rating itself is still a problem, though. We are still reducing the employee's year's worth of angst and overtime to a single number. It's the equivalent of giving someone a wristwatch after 20 years of faithful service. Gee, thankyou, bastard. So the second, more radical solution is simply not to give a performance rating, but instead to write up the annual performance review, listing the person's good and bad points, aspirations met, etc. In fact, as you'll see from the recommended reading list below, some people suggest that you go even further and abolish the performance review altogether, replacing it with more appropriate practices.
Message Forum Message Index:
The Messages: Performance RatingsWhenever an employee's rating is based on the subjective perceptions of his or her managers, the employee will end up victimized. I would hope that companies that rely on these kinds of evaluations are dwindling rapidly. Obviously, an employee about whom a lot of other employees or customers complain or exhibit behavior-based negative feelings is one about whom, or for whom something needs to be done. But these employees are a small minority and should not be the justification for a system that victimizes most employees A fair performance rating system would be based on fair, objective performance targets negotiated between the employee and the company, and that are completely in the employee's power to achieve. For example, despite the importance of customer satisfaction, I would never rate an employee on the basis of customer feedback unless the feedback population was large enough to eliminate personal bias or cover-their-own-butt defamations by bad customers. This rarely happens over the course of a single year. One strategy I used with a lot of success was to guarantee cost-of-living-only raises to any employee who consistently demonstrated competent performance against a profile for his or her position. Any employee who wanted a bigger raise had to meet specific personal or professional improvement goals. For example, as a Practice Director for Software Quality Management, I wanted specific team members to advance their quality management skills, e.g. requirements validation, instead of continuing to do code testing. For these people, I negotiated a performance objective to achieve a certification in Software Quality Assurance. If they got the certification, they would also get a raise - not a bonus, a raise. For others, especially people with English language deficiencies, I found low-cost language laboratories at local community colleges. I allowed them to expense the cost of the courses, and, if their English language skills improved, they got the same raise - again, not a bonus, but a raise. By using this system, I was able to rate employees objectively and reward them accordingly. This did not take genius, only a little imagination, a lot of lobbying with my own management, and a refusal to allow subjective bias to enter into the rating and reward process. Robert Benjamin Robert.Benjamin@SeniorPartnersGuild.com East Windsor, NJ, USA Sun Jan 04 20:51:23 GMT 2004 In the city In the City your performance rating can be calculated exactly as follows : RATING = TEAM BONUS / 'PERCEIVED' CONTRIBUTION N.B. RATING is ALWAYS measured in Pounds Sterling. Robin Sharp robin.sharp@javelinsoft.com London Tue Jan 06 20:48:31 GMT 2004
Related Articles What's Wrong With Annual Performance Reviews?
Related Books (Links to Amazon.com):
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