yearly employee evaluations

The Inflation of Annual Performance Evaluation Ratings

Just recently I heard a story shared by one of our clients. There was a time in an ordinary office when four copy machine in the same work area had run out of staples. The absence of staples in the area resulted in everyone who was in need of a stapled copy searching for the nearest stapler. Naturally, nearest staplers ran through the stock quickly. No one resorted to addressing the problem and restocking the copy machines with staples. In other words, everyone took the path of least resistance, which temporarily addressed their immediate need but, in reality, only the core problem worse.

I notice how organizations take the same path when approaching annual employee evaluations — instead of dealing with the problem, they end up inflating them yearly. This results in managers losing the ability to truly praise top performers, distinguish behaviors and analyze outcomes. Specifically, the management loses the responsibility of leading and managing.

6 Reasons Why Rating Inflation is Taking Place:

·       Managers Don’t Believe in the Accuracy of Performance Rating

Management tends to lose faith in measurement systems. It often happens that organizational priorities change and evaluation standards no longer reflect actual performance. Excellence becomes impossible to objectively define. Instead of sitting down with a union to deal with the issue and reimagine the whole system, leaders begin to look for workarounds making the system in place even more useless. Essentially, this is choosing the hunt for staplers over restocking copy machines.

·       Playing Favorites Catches Managers in an Upward Spiral

It all starts innocently when managers realize that a given employee contributes beyond what the system can capture. On the other hand, sometimes it is just what it is — a manager starts playing favorites, perhaps, even without realizing it. Regardless of the cause, by attempting to improve the rating of lower performers based on their extracurricular tasks, managers end up widening set categories for measuring excellence.

·       Despite Shown Performance Managers, Want to Show Appreciation for Improvement Efforts

Another familiar case: an employee works hard to step up their skill and improve performance, yet the results may not be as high as they hoped for. In order to reward effort, the manager chooses to rate the employee higher than they would otherwise deserve to avoid demotivating the person. Despite the noble cause, the “staples” issue deteriorates further.

·       Managers are Unwilling to Defend Lower Ratings or Face Conflict

Truthfully, people don’t like having to deal with conflict. Sitting face-to-face with a person looking them in the eye only to give them news they do not want to hear — hardly sounds like a pleasant time. In addition, complaints are to be expected and even followed up by additional paperwork seeking to defend the given rating. Justification may be needed not only at the employee level but also at the level of union activity. Defending yearly employee evaluation results can become bothersome and quite time-consuming, which, by the way, still can multiply by the number of employees with underwhelming ratings.

·       Managers Don’t Want to Be the “Bad Cop” Among Their Peers

As the evaluation system keeps getting inflated, it becomes difficult for any of the managers to stick to the original system without standing out. When a manager starts getting the rep of a “tough one”, it makes it hard to keep the talent on the team and recruit a new one. Therefore, instead of holding the line, managers tend to give in and subscribe to performance ratings they don’t believe in.

·       Managers Don’t Want to “Rock the Boat” After Failing to Coach, Give Feedback and Rewards

Some managers have difficulties learning how to encourage, coach and give positive yet insightful, feedback throughout the rating period. This results in failure to address performance related issues as they begin to occur, which leads to it being too late to bring up by the end of a work year. Additionally, evaluation results should not come out of nowhere.

Lack of coaching can be either lack of manager’s attention or lack of coaching skill in general. To be fair, the organization should be interested in equipping its management and developing talent, which may not necessarily come as a natural ability.

5 Ways to Address the Issue:

·       Get Evaluation Criteria Up to Data

Just get the criteria right, if what you are using is outdated. Make time to sit down with the leadership union and determine what measures can be used accurately to fairly evaluate and reword peak performers. Narrow down the specifics, figure out how much do the weight and assign adequate values to be able to move on with the new system.

·       Recognize the Difference Between Performance and Improvement

There is nothing wrong with distinguishing the two and having a separate award for “best improvement” aside from performance evaluation. This way you won’t need to demotivate someone who’s been working hard to improve throughout the year but isn’t quite there when it comes to core evaluation standards. Neither you will need to stretch the criteria to cater to lower performers. After all, the risk you’d be running with being untruthful is highest.

·       Ensure Regular Communication to Be on the Same Page

Any system will naturally drift in the direction of inflation. Therefore, communication is needed to allow managers to help each other stay objective. Allowing managers to review each other’s ratings would be unwise, but they can be comparing ratings proportionally. If up to 80-90% of employees turn out to be performing at the ‘excellent’ level, then this word inevitably loses meaning and with that management loses the ability to reward and praise truly excellent performance. When teamed up with your colleagues, you can exchange and compare notes to help one another remain objective. It would also solve the problem of unintentionally “standing out” during the yearly performance results announcement.

·       Stay Away from Quotas, But Observe Category Ratios

When comparing notes, managers can observe whether top ratings are reserved for the real performers. This represents how well excellence is defined and that it puts the spotlight on the right people who have worked for the title, instead of being synonymous with mediocrity. Over time managers will develop a general idea of performance proportions on the team, but they should not be implementing quota systems.

·       Arrange Manager Training and Support

Proper management rarely comes naturally, but it can be taught. Organizations should provide their managers with training on how to coach, shape behavior through praise, give positive feedback and sensitively, yet effectively correct performance errors. Managers should feel equipped to be able to shape behavior through positive feedback as well as sound criticism. In other words, the management team needs to reinforce strong suits through praise and emphasize areas for improvement through correction.

As a result, annual performance evaluations will not only function to sum up employees’ performance and reflect the monthly efforts.

3 Reasons Why the Problem Should Be Dealt With

·       Motivation Works When the Goal Is Defined

Back in the days, it was considered that the 4-minute mile barrier could not be broken, until it was. Now, 4-minute mile barrier defines excellence. People will push themselves to reach for excellence once it is demonstrated to be achievable. By accommodating the feelings of average performers, you are taking away their incentive to grow. You are also sending the same message to everyone else lowering the standard for the whole team and suppressing their growth.

·       Dishonest Ratings Are Demotivating

Employees will always know in an instant when the rating system is played and untruthful — this opens the doors for cynicism to take over. Once your employees give into the cynicism, they lose interest and passively play into the system instead of striving to grow. With the words losing meaning, management loses credibility which causes organizational communications to take a hit. That’s where you will start noticing that people are only giving a fraction of their energy to meet the minimal standard. How can you expect them to go all in when the trust in leadership is lost?

·       The Importance of Shaping and Rewarding Performance

Upon losing the ability to properly define, measure and reward, give feedback to all tiers of performance, the organization begins to gradually lose its effectiveness. Not to mention that top talent will not be attracted to an organization where it’s not valued or rewarded. Moreover, the organization will risk losing its best people, who will recognize stagnation and leave in search of better opportunity.

Don’t lose your grip on yearly performance rating system in your organization. If you find yourself having to deal with inflated evaluations process, then apply these methods to regain control and credibility to management.