Performance Appraisals are conducted to evaluate employee performance, identify skill development needs and recognize valuable contribution of the top performers. Using a standard rating criterion in performance evaluation ensures fairness in the process.
Impact of Rating Patterns of Managers in Performance Appraisals
During performance reviews, every manager uniquely evaluates and scores employees on multiple performance parameters.
Rating patterns of managers varies from ‘strict’ to ‘lenient’ which create variations in appraisal scores of employees performing at same levels. This results in manager-biased ratings and unfair performance evaluation. Impact of score variation creates dissatisfaction in top performers or even sustains mediocrity in overall workforce productivity.
Let’s use an example to explain this.
There are two Professors in an institute. One professor evaluates minutely and scores strictly. In this class, the top scoring student gets 7 marks. The other professor, who is lenient, gives comparatively good marks to his students and the top scoring student gets 9 as his final grade.
Although the former is more intelligent, knowledgeable and a top performer, it is the latter who receives better grades. Low scores demotivate the first student.
Same situations are likely to arise in organizations where scoring patterns of managers differ. Unfair evaluations damage company rapport, as top performers feel that their efforts aren’t adequately recognized and rewarded. This also creates a rift between the managers and employees and encourages high rating irrespective of the performance.
Normalization is a technique used to balance the variability in appraisal scores and introduce fairness in the review process. Companies intend to normalize appraisal scores to remove manager oriented biases during performance appraisal cycles. This helps in providing greater objectivity in the process.
About the Company
This case is about a small Research and Development company in India with 150 employees and 14 managers.
Problem Statement and The Need
The company faced a key challenge in performance appraisal.
During reviews, each manager evaluated and scored employees differently. There was no standard rating criterion available for managers to evaluate their team members. This resulted in unfair evaluation and inconsistent performance scores.
Rating patterns of managers introduced high degree of variability in appraisal scores of the employees. As a result, average and top performers got on the same level that demotivated and created dissatisfaction in high performing employees.
While most employees were working hard, variation in appraisal scores affected their performance-based promotions and incentives. This became one of the most dissatisfying factors for the top performers, and some of them even ended their services with the company.
The leadership realized that the existing evaluation system didn’t fairly evaluate employee performance and encouraged average performance in the organization. This promoted mediocrity in the organization.
The client needed a well-designed measurement system that would help normalize appraisal scores and evaluate employee performance fairly. And once done, compare employee scores on a simple dashboard.
The company surveyed many products, and invested in Empxtrack Performance Appraisal software as it could address their challenges and offered maximum customization.
In one or two discussions on requirement gathering, the team understood the client’s need.
It took only a few days for Empxtrack team to take the key requirements live. New forms were developed to overcome the variance in evaluation style of the appraisers. HR could download all the final scores, calculate the variations because of managers bias and input the final scores. Once done and approved by the management, the final scores could be uploaded back into the system for a final discussion between employees and managers.
In addition, HR could easily compare employees’ performance scores (as also the historical data) on a single screen.
This ensured fair grading practice, even if managers had the tendency to be more lenient or strict when giving performance scores.
Empxtrack introduced a well-structured appraisal process that:
- » identified and examined the performance scores given by the Managers (Appraisers) and ensured that unbiased relative ranking does not exist.
- » eliminated any scope for manager bias during performance reviews.
- » gave a common screen for comparing performance scores of all employees.
- » ensured transparency and objectivity in the review process.
- » engaged and motivated top performers by evaluating their performance fairly.
During appraisals, managers often rely on their memory to rate employees. Absence of a standardized process and yearly performance reports become the root causes of biased ratings.
Automation can surely support organizations to overcome performance appraisal challenges, maximize effectiveness of the appraisal process and conduct fair evaluation.
Companies looking forward to a change must own an online appraisal software, get yearly performance reports, continually track performance and gain better insights in employee performance. This would ensure higher degree of employee satisfaction and retention of top performers.