When considering an organization's merit increase process, a common complaint is, "we have too many employees rated too high." Which means the performance rating distribution curve is skewed. Too many employees walk on water, while too few are not carrying their own weight.
A "normal" distribution curve of performance ratings, using a typical five point scale, looks something like this:
- Distinguished: Up to 10% of employees
- Superior: 20% to 30%
- Fully Successful: 60% or more
- Needs Improvement: 10% to 15%
- Unsatisfactory: Less than 5%
The descriptive language differs between companies and percentage guidelines vary as well, but you get the point. Most performance ratings would normally be expected to cluster around the middle, with smaller percentages moving out to the extremes.
Is this how your company scores employee performance? Don't be surprised if it doesn't. The pervasive problem that fuels inflated ratings can be boiled down to a single question; "what employee wants to tell their mother that they're average"? We all think that we're achievers.
And it's worse at the top.
The Trickle Down Problem
The problem of skewed performance ratings usually starts with how a company's management treats themselves. Leadership sets an example in performance assessment that's inevitably replicated by the rest of the population, for good or ill.
Usually it's for ill.
Management tends to consider their performance using a different measurement stick or justification than the rest of the organization. Actual performance seems to be less a rating criteria than you would expect. Sometimes it's overlooked if not downright ignored.
Let's take a look at some common management reasons for skewed performance ratings. How many have you seen?
Entitlement: When management feels that at least a portion of their annual bonus or merit increase is due them, "just because." It's been 12 months and they feel entitled to receive their annual reward.
Feel good: When you want the employee to feel good about themselves and the company. When you want to recognize effort instead of results, or when the company has had a tough year and the employee has "hung in there."
Retention: When the rationale is that the company has identified a particular employee as a talent that needs to be retained. This card is usually played when the reward process coincides with a reorganization.
Leaders need competitive pay: This is a fall-back position for the desperate, when performance arguments don't work. In order to retain leaders the company has to ensure that their pay is competitive. This is not about performance at all, but keeping up with the marketplace.
Cannot use the rating scale: Here is a problem as old as the performance appraisal process itself. Some managers have a difficult time rating an employee less than "average." Excuses are legion, but the result is that objective assessment takes a back seat as almost all employees are rated average or above. And if marginable performers are bumped up into "average," how do you think the truly average are rated?
Leadership is always rated higher than the regular folk: This one is rarely voiced out loud - though repeatedly we see the results in the statistics. If you're a leader and not being readied for termination, then you must be pretty good. Having poor performing leaders is a strong criticism of senior management, and we can't have that!
What Can You Do?
Training sounds like a nice problem resolution strategy, but is often a throwaway thought - like "let's push the EASY button and then go to lunch." In my experience behavioral change rarely results from sitting through a classroom session or by sending out a bunch of memos.
You need a bad guy.
You need to inject a healthy dose of discipline into the performance rating process. Calibration sessions are useful, but you need someone in HR and at the top of the organization who demands a performance-related reason for each rating.
Someone has to say "stop!" when ratings no longer make sense; when they don't correlate with how the business performed; when appraisals are poorly written, and when excuses trump objective assessments.
Lack of managerial discipline enables bad practices to continue, to even flourish and to spread throughout the organization.
That culture change you might be hoping for could morph into the very opposite of your goal; you could be developing an anti-performance culture.
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.
Creative Commons image, 'See No Evil," by allyaubry