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Could Lack of Management Training be the Reason Why Performance Reviews Don’t Work?

If you think about what are the best performance management programs that have been put in place, they're usually systems that can really differentiate top talent from not quite top talent.

Too many times, what I've seen, companies will spend hundreds of thousands of dollars putting in these great software systems but they still fall victim to the number one problem plaguing performance reviews in companies across America: grade inflation.

We know that the path of least resistance is avoidance, and people generally avoid confrontation whenever possible. This all too human trend often finds its way into the annual performance appraisal process, where supervisors inflate grades to appease subordinates in an effort not to “demotivate” them.

Unfortunately this practice creates documentation that subordinates’ performance met company expectations for the period, which makes it much harder to terminate or lay off people who in reality may be creating more problems and challenges than they’re solving (especially relative to their peers).

Maybe It’s Not Personal...

But let’s assume this isn’t about problematic individual performance; let’s assume instead that the organization may be suffering because the enterprise-wide scoring system doesn’t realistically address workplace performance. In other words, we don’t want an organizational scorecard that shows that everyone is a 5 on a scale of 5 (i.e., superheroes).

This creates a rising string situation where a few people are fours and threes and twos, but almost everybody was a five. It’s usually a sign that managers don't know how to differentiate.

  • They don't know how to award the scores.
  • They don't know how to really talk about what is stellar performance, distinction, performance excellence, the person who is a role model in terms of their behavior.

And we want to avoid distributions where everyone is a 3 on a scale of 5 (i.e., “meeting expectations”) because supervisors, like unyielding college professors, won’t give an A unless an act of Congress is involved. Instead, we want a distribution that accurately and fairly distributes performance scores across the company’s footprint and fits more of a bell curve distribution.

I started noticing this issue in my own organization. A few people were coming in as fours and threes and twos, but almost everybody was a five, and what that taught me was for all the money that we invested in the program, our managers didn't know how to differentiate. They didn't know how to award the scores. They didn't know how to really talk about what is stellar performance, distinction, performance excellence, the person who is a role model in terms of their behavior.

Reinventing “Overall Score” Terminology to Avoid Grade Inflation 

When solving this enterprise-wide grade inflation challenge, it all comes down to reinventing and redefining some tired terminology that’s been passed down from one management generation to the next without much forethought or insight. Your goal then will be to create the scoring section of the review so that it’s more relevant, up to date, and engaging to your employees. Supervisors are often embarrassed to award a score of 3 because the description of 3 equates to “meets expectations.” That’s an exceptionally flat and potentially insulting way of describing an individual’s sum of contributions to your organization over an entire year. But the problem isn’t only with 3s. The other scores often have similarly flat descriptors assigned to them as follows:

  • 5—Superior
  • 4—Exceeds Expectations
  • 3—Meets Expectations
  • 2—Partially Meets Expectations
  • 1—Fails to Meet Expectations

It’s no wonder that managers often avoid awarding a score of 3 and that employees interpret a 3 as the equivalent of a C in school. Talk about demotivation! But annual performance reviews aren’t supposed to be a paper chase that managers have to conduct and employees have to endure to simply justify awarding a merit increase. Instead, they should represent a special time of the year where the company and supervisors formally focus on their employees’ performance and career development needs, acknowledge the many achievements accomplished, and discuss ways of preparing individuals for future challenges and more advanced responsibilities.

Following this logic, we could reinvent the scale above as follows:

  • 5—Distinguished Performance and Role Model: Clearly and consistently demonstrates extraordinary and exceptional accomplishment in all major areas of responsibility. Others rarely equal performance of this caliber in similar roles.
  • 4—Superior/Highly Effective Performance: Performance is continually and consistently superior and regularly goes beyond what is expected. Performance consistently exceeds expectations.
  • 3—Fully Successful/Effective Performance: Performance consistently meets the critical requirements of the position, and the individual continually performs at the level expected.
  • 2—Partially Successful Performance/Needs Improvement: Performance does not consistently meet or occasionally falls below what is required of the position; improvement in specific areas is required.
  • 1—Unsuccessful/Unacceptable Performance: Performance fails to meet minimum expectations for this role, and immediate and sustained improvement is mandatory.

With this fine-tuned rating scale in hand, your managers will have a much easier time awarding “Fully Successful” scores of 3 (where roughly 50 percent of your workforce should rank on average at any given time), and your employees will have a much easier time accepting them.

It’s a fairly simple fix that, when combined with the appropriate communication, can help companies reinvent their performance review programs overnight and steer away from the dreaded “grade inflation” landmine that undermines the value of many performance management programs.

Save Your Money, Take Time to Train for Performance Reviews

You have to be able to discern your top talent, and you want to use this as a motivational tool, and when you look at that group that's getting these exemplary scores, these are your high potential people, and you're going to develop a separate program for them to take on more responsibility which leads into succession planning. So there is a very logical sense to this. The good news is it can be done on the back of an envelope. You don't need to spend money on softwares.

This is really a matter of putting it on paper and saying if you have a five and a four and a three as your top scores, let's put people in some of those boxes, let's talk about it, because the conversation with everybody, the leaders in your department about everybody in the group is a very healthy way of going about this, and then once we've all agreed on what's a four versus who's a three versus who's a two meaning they're only partially successful in their job, then the managers can go ahead and write the reviews. What you don't want to do is have them write the reviews first, tabulate the scores afterwards, and find out everyone is a five, or no one is more than a three.

Having those conversations up front, what we call calibration discussions is a very, very important way to cross-pollinate ideas in your department and give everyone a chance from the management team to be heard about what they're experiencing in dealing with staff members in the department.

Paul Falcone

Paul Falcone is an HR executive who has held senior-level positions with Paramount Pictures, Nickelodeon, and City of Hope. A long-time contributor to HR Magazine, he is the author of many bestselling books, including 2600 Phrases for Effective Performance Reviews. He lives in Los Angeles.

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