Why end-of-year evaluations are inherently biased – And how calibration makes it worse

As the year winds down, many organizations enter the familiar season of end-of-year evaluations—a time for assessing employee performance, setting bonuses, and charting growth opportunities. The more I observe or participate in these processes, the more I am convinced that they are deeply flawed, particularly when so-called “calibrations” and forced distribution models are involved.

The Biases of Year-End Evaluations

Human judgment is inherently subjective, and performance evaluations are no exception. Managers tasked with assessing employees often bring unconscious biases to the table. These biases can take many forms, including:

1. Primacy Bias: Overemphasis on an employee's initial performance, causing early impressions to overshadow subsequent developments.
2. Recency Bias: Overemphasis on recent performance, overlooking achievements from earlier in the year.
3. Halo or Horns Effect: An employee's single strong (or weak) attribute disproportionately influences the overall evaluation.
4. Confirmation Bias: Managers unconsciously seek evidence that aligns with pre-existing opinions about an employee.
5. Central Tendency Bias: The tendency to rate all employees as average, avoiding extreme ratings and potentially failing to recognize exceptional or poor performance.
6. Leniency or Strictness Bias: Some evaluators may consistently rate employees more leniently or strictly, leading to inflated or deflated assessments that don't accurately reflect actual performance.
7. Contrast Effect: Comparing employees against one another rather than against a set standard, which can lead to skewed evaluations based on relative performance instead of individual merit.
8. Similarity Bias (Affinity Bias): Favoring employees who share similar characteristics or backgrounds with the evaluator, which can result in unfair advantages for certain individuals.

The consequence of these biases is an evaluation process that will feel arbitrary or inconsistent to employees, undermining its credibility and fairness.

The Calibration Problem

Many organizations attempt to “standardize” evaluations through calibration sessions, where managers adjust ratings to ensure alignment across teams or departments. While this may sound fair in theory, it’s often where things go most wrong.

Calibration panels typically include managers who don’t work closely with the employee being evaluated. They rely on secondhand accounts, subjective interpretations, or even personal biases to compare employees who may be operating in entirely different contexts.

Consider this:

• An employee with local objectives (e.g., solving region/entity-specific problems) is being compared to someone with global objectives (e.g., managing cross-regional/entities initiatives). The two are not apples-to-apples, yet they are often forced into the same evaluation framework.
• Employees who work in highly visible roles are more likely to get favorable outcomes than those excelling in behind-the-scenes functions, simply because visibility influences perception.

The Hidden Biases in Calibration

The calibration process, while designed to ensure consistency and fairness, is not immune to bias. Key factors include:

1. Lack of Contextual Understanding: Global managers often rely on second-hand information or aggregated summaries, undervaluing achievements that aren't immediately visible.
2. Comparison Across Unequal Standards: Employees across different teams, departments, entities or geographies are often evaluated using inconsistent standards.
3. Cultural Bias: Employees from regions or entities with less assertive cultures might be undervalued compared to peers in more self-promotional cultures.
4. Subjectivity in Discussions: Calibration discussions often involve opinions, hierarchies, and politics, where a manager’s influence can overshadow objective metrics.
5. Pressure to Normalize Distributions: Forced distribution models lead to arbitrary downgrades of top performers to fit predefined quotas.

The Local vs. Global Misalignment

One of the most glaring issues arises when local performance is judged against a global vision that doesn’t account for regional nuances. Employees tasked with meeting specific local objectives are often penalized for not aligning with broader global goals that may not even be relevant to their work. This misalignment sets employees up for failure—or at the very least, underappreciation.

The Gauss Bell Trap

Many companies use a forced distribution model, often represented by a bell curve, to “balance” performance ratings. While theoretically ensuring balance, this practice exacerbates biases:

• Arbitrary Adjustments: High performers may see their ratings downgraded because there “aren’t enough spots” in the top tier.
• Rewarding Average Performance: Employees with room for improvement may be rated as average to meet distribution requirements, while top performers are pushed into the middle tier.

• Demoralizing Excellence: Teams with high-performing cultures are penalized by forced labels of average performance, undermining trust in the evaluation process.

The Negative Impact on Employees and Organizations

Unfair evaluations do more than misrepresent performance—they actively demotivate employees. Key impacts include:

1. Erosion of Trust: Witnessing unfair treatment diminishes faith in the system.
2. Demotivation and Disengagement: Employees lose motivation to excel if their efforts go unrecognized.
3. Career Advancement Barriers: Poor evaluations can unjustly hinder career progression.
4. Ripple Effects on Team Dynamics: Inconsistent evaluations weaken team morale and productivity.
5. Turnover Risk: High-performing employees are often the first to leave when they feel undervalued.

For organizations, the stakes are equally high:

1. Reputation Damage: An unfair evaluation system tarnishes an organization’s reputation, making it harder to attract and retain top talent.
2. Missed Opportunities for Growth: Misjudging high performers stifles innovation and progress.
3. Loss of Alignment with Core Values: Calibration decisions that undermine fairness and transparency create a disconnect between stated principles and actual practices.

A Need for Fairness

Performance evaluations should recognize achievements, provide meaningful feedback, set the stage for growth, and motivate employees. Fairness must be at the heart of this process. End-of-year evaluations and calibration should not be political exercises or distorted comparisons of apples and oranges.

Fairness isn’t just an ethical imperative—it’s a business one. An unfair evaluation system erodes trust, demoralizes employees, and ultimately hinders organizational success. Leaders, managers, and HR teams must recognize the biases and systemic pitfalls of current evaluation processes and commit to ensuring that every employee feels valued for their contributions, regardless of context.

On a personal note, fairness is a defining hallmark of a healthy organization—one where individuals are valued as integral contributors rather than merely resources to be managed. Failing to ensure fairness comes at a steep cost: it erodes trust and stifles motivation. Ultimately, an unfair system not only harms individuals but also weakens the organization's ability to thrive and innovate.