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Rating and Ranking Employees – Yikes!

The month of January not only starts the new year, but it serves to end the old one. For many businesses, January sends HR folks and Managers into a frenzy trying to finalize employee reviews, ratings and rankings for the entire staff.

There are score sheets, narratives, interviews, and ‘coaching sessions’ done to inform employees how they did with the last twelve months of performance. Thousands of hours are dedicated to performing this daunting task. And to what end?

Anyone who has ever worked for a company with more than 50 employees has likely been subject to or responsible for the processing of this archaic ritual.

It’s a Littered Road

Let’s look at some history. The idea of doing such a process no doubt started with good intentions. Let’s face it, we all like some appreciation for the work we do. Furthermore, if we’ve been doing the work for a while, we feel the need to get a raise or bonus. It’s a risk/reward mindset. “I took the risk by dedicating my time and effort, so what is my reward.”

From the company’s viewpoint, if we’re going to permit merit raises for good performance, we need to be ‘fair’ in how we do that. If we have a larger population to administer, not all frontline raters will think the same, so we need layers to screen the outcomes. Hopefully (and I stress that word), the layered process can more evenly distribute the budget we allocated to the raises and bonuses.

Having said just this much, the system is already broken, right? I mean what about the individual contribution? Does it get melded and mashed into a corporate box ranked one thru ten? Or worse yet, rated one thru five? What’s the real difference between a seven and an eight, or a four and a five?

Compound this method by declaring the rankings need to be distributed on some bell curve, now you have a real mess that totally unmotivates even the best of performers. I’ve even seen “force-placed” ranking systems using scores one through 100. Managers are told you only get one person at 100 and somebody has to be the one.

From where I sit, with 40+ years of leadership experience, the rigid ranking and rating systems produce no positive outcome. It relegates your best people to ask simply, “What am I going to get paid?” Your lower performers likely already know they are slacking and the process only agitates an already bad attitude.

Throughout the year, bosses who may have thanked an employee for a good project outcome or praised them openly at a team meeting get ambushed at year-end when that employee is rated a three out of five and told “you met my expectations.” The boss rates them that way because, compared to the rest of the group, the middle of the pack is where they stand. Or, still bad news, the boss forgot about the good outcome from May when trying to rank the whole team at year-end. Yes, it happens.

A Story

Remember, I said the HR folks get hammered during these rating cycles? Here’s one for you. I got a call from an HR professional I’ve known for 20+ years. Her company had gone through major layoffs due to the COVID pandemic. The division she supports had suffered what amounted to a 33% cut in the team last year. Everything was wild and wooly for a while but seem to have settled down now.

employee review

They did their year-end performance appraisals and all the surviving people met their goals, according to the commercial software system they use for administering employee performance appraisals. The goals, by the way, were set by corporate, not by the local managers, and are lock-tight tracked and reported by the system. They apparently use a three-point system for assigning an overall score… ‘met goals’, ‘needs improvement’, or ‘move them out’. (How’s that for motivational messaging?)

Corporate called her to say that THE COMPLETED PROCESS was unacceptable. The results should have produced more of a bell curve with 2-3% of the highest-ranking at the top, and equal distributions below. By the way, it’s not clear what happened to the STANDARD bell curve with 20% at the top and bottom, 60% in the middle? She also reported she was totally confused why she wasn’t given these instructions at the beginning of the process.

So they are asking her and her managers to change the ratings after the entire process has been completed! She is about to lose her mind. All of this non-sense from a Fortune 500 that should know better. No wonder people hate HR.

In addition, you must ask yourself, what about the employees who have already been told about their standing?

That ‘Less Than’ Feeling

The whole artificial mess leaves employees with a ‘less-than’ feeling. ‘I am less than what the company wants.’ I feel ‘less than’ excited to work here.

I am convinced it is programs like this that are contributing to the Great Resignation. It’s exactly why good people are leaving what otherwise might be considered good jobs to start their own businesses or search for more employee-friendly environments. People are simply fed up with old systems, narrow mindsets, and poor evaluation systems.

Leaders at all levels must realize the need for better employee communication. Communication of expectations, clear goals, and priorities, plus fair accountability standards. It’s a huge challenge. But it can be done.

Join me in my 2022 Challenge to Be a Better Boss. Visit the challenge here.

As a bonus, here are several other articles I’ve written on this important subject.

The King of Leadership Fails – not recognizing good talent

Kill the Bell Curve – why the normalized bell curve doesn’t work in today’s market

Is Your HR Department Lying to You? – why we need to reform performance reviews

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