How Employee Performance Ratings Can Be Improved Do some internal research to find out from your employees and managers whether they find that ratings actually improve performance and motivation or negatively impact it.

Our advice would be to question whether you really need performance ratings and, if you are using them, evaluate their effectiveness in achieving your performance management goals. This is the key question, and there is no right answer as it will depend on what your ultimate goals are for your performance management process. It lets employees know where they stand in relation to their peers. It can provide supporting evidence when taking action against poor performers (e.g. It enables organisations to understand who their top performers are for talent planning purposes. It provides a convenient way of managing performance related pay - although there are certainly a number of ways you can manage rewards without performance ratings. The main arguments for rating performance are: Why Performance Rating Can Be Usefulĭespite these problems, many organisations are still using employee performance ratings. The rating is what the employees remember after the event, and not the discussions that went with it.Ī final problem with performance ratings is that they are largely subjective and prone to a number of proven rating biases such as the”contrast effect”, “halo and horns effect”,”similar-to-me effect” and”central tendency bias”. Researchers have also found that employee performance improves through good quality feedback and that assigning a performance rating tends to prevent that feedback from being taken on board. Furthermore, research into neuroscience has found that performance ratings activate a flight or fight response in the brain and decreases subsequent performance. Some studies have found that performance ratings actually demotivate employees and negatively impact performance, except for those people rated at the highest end of the scale. The Problem with Employee Performance Ratings But there is now an increasing backlash against rating performance, and some high profile companies such as Adobe, GE and Microsoft have abandoned them. Indeed, the 2014 E‑Reward performance management survey found that 77% of organisations used employee performance ratings. In many ways it seems an obvious thing to do - most companies want an easy way of understanding who their good and bad performers are. Should you use an overall performance rating as part of your employee reviews or appraisals? The use of employee performance rating is without doubt the hottest topic of debate in performance management circles at the moment.

Sector is clear not clear not clear