Why I wont be stopping performance ratings

I am sure most of you by now will have read about how all performance management systems are broken and the most progressive companies are moving away from rating employees - it’s the new bandwagon for people to jump on.

I am not convinced.

Before you read this and start shouting that I am stuck in the past - far from it. I am looking forward to reading about the first company that has run two systems parallel, compared success metrics and then presented me with some facts to justify the change.

As far back as 1991 the then Institute of Personnel Management concluded that performance management was about making sure managers manage properly - that they clearly communicate to their staff what is expected of them and give them the means to meet that expectation. 

Whilst I read daily about people scrapping their systems I am yet to see what one of these new systems looks like and empirical evidence to show it works better than the 'old fashioned' systems they had previously. Though I agree that if a line manager is addressing their employee’s performance only through a ‘formal’ appraisal once a year – we do have a huge problem.

An article recently described a large MNC - who had scrapped their ratings - and had replaced them with simply performing/not performing -(isn’t that a form of ranking on a scale of 2?). When asked about what improvements had been noted, it stated after 2 years "it’s still too early to see if it worked". In the business environment we operate in now – we don’t have the luxury of that time to be working out what should be working to drive performance.

Let’s say I remove the ratings I use now and replaced them with performed or not performed. With a performance based reward philosophy - how do I distribute reward fairly between my ok performer and my superstar - who now both rate as ‘performed’? - If they get the same review I disengage my superstar - If I give the superstar more than the person with the same rating they will both ask why. However if one was rated as a "3" and the other a "5", I can quantify and justify my decision making around reward allocation and potential Talent interventions.

Research has shown that its only around 15 to 20% of your population that really make a difference to the bottom line. With a performed/not performing label – do you really want to lump them with the other 30% of mediocre performers and risk losing them to the competition when they become disengaged by not being recognised?

 Ratings work for me because -

• If your systems are set up correctly – the ratings should be clear and transparent and can be defended if challenged. I work in a complex multi cultural environment and here it can stop accusations of favoritism and tangibly support a decision around Talent or Reward.
• When we create a business case for an employee to receive an out of cycle pay review and the CEO asks why - I can produce his current KPIs and rating against our behavioral framework, last review rating and talent rating. I would feel much more confident in securing their salary review than having to say "he is a millennial he doesn’t like ratings so we just class him as performing – we don’t have much more information than that". You can probably predict the outcome of that conversation.
•  Ratings shown against a standard distribution curve can tell me if a department is setting 'easy KPIs' or even the opposite. It can tell me how performance is being approached in this area in a simple snap shot.

I cringe inwardly when people talk about how they are moving to 'real time' check-ins online. Isn’t giving direct and timely feedback frequently to your employees just good management practice that has been around a long time?

Why is an online portal or app superior to taking a brief moment to talk with your employee, give them your time, sit with them and thank them? I understand the communication medium can change - let’s just not forget some of the ‘old fashioned' basics.

I have no issues with apps, portals or whatsapp I use them frequently but let’s remember the appropriateness of the right tool for the right message. I can never forget the UK company that made all its staff redundant by text a few years ago - I am sure this idea when it was suggested was considered a ‘quick and efficient cost saving communication tool'. But no doubt the HR head that allowed that still looks back in horror at that decision.

Whilst I marvel at the options we have to communicate now - I worry sometimes we have forgotten we are still dealing with ‘people’.

 I am still reading a lot of 'ideas' about the scrapping of PM systems and ratings - but yet to really see anything that makes me sit up and say 'wow'. Frequently meeting with your employees, giving real-time feedback and reviewing goals and achievements weekly is just good management and I don’t need an 'app' to make that happen. More worryingly the app won’t fix a poor manager or their poor practices.

Managing performance lies with the line manager it is here where the fix starts. Ratings are not broken - It’s the process that feeds into the ratings that needs the work.

What I am advocating is – 

• Upskill and educate the line on good Performance Management, provide simple tools and educate them on the right way to use the tools. Equally educate your employees on what their line managers should be doing
• Making sure line managers are setting clear, aligned KPIs, objectives and frequently communicating the required behaviors to their teams.
• Monitoring team results daily and weekly
• Making feedback frequent and timely using whatever medium is appropriate at the time
• Train managers to diagnose performance issues, develop their skills around feedback and give them a performance framework to benchmark against.

Rating people ‘performing or not performing’ or A/B/C or whatever the new terminology is – this is still rating people.

It’s not the rating that isn’t working but the whole process behind it that needs attention - whatever happens, for the moment I won’t be throwing them out.