Lucy dhr
Lucy Adams
August 30, 2022
Reading time: 10 minutes
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We’ve read the research, we’ve got the feedback from our people, or we’ve reflected on our own experiences. So, we all now know that rating people doesn’t help improve performance or motivation. And yet, we really worry about what will happen if we get rid of them! In this blog we look at the consequences of getting rid of ratings – both real and imagined!

How will we know who’s the best/worst performing? How will we differentiate performance?

This is a common worry, that if we can’t give our people a number out of five, we won’t have a clear picture of performance in the organisation.

It’s important to look at the assumptions behind this concern to be able to recognise it’s not valid.

  • It assumes that line managers are brilliant at being objective and consistent when it comes to deciding ratings. Any follower of the researcher and writer Marcus Buckingham will tell you that they aren’t. We all suffer from rater bias – not because we’re bad managers – but because we’re human. The ratings we give out are subjective and flawed data and fail to provide a complete picture of someone’s performance over a year. It’s much more complex and nuanced than a single number.
  • It also assumes that employees won’t know how they’re performing unless we give them a rating at the end of the year. They will. Getting rid of ratings is not the only step in your reform. It also involves moving to frequent check-ins where we have much more relevant and impactful discussions about contribution and performance than the once-a-year set piece. People will have more of an understanding of how they’re performing, not less.
  • Finally, this concern assumes that performance can only be differentiated via a rating. It isn’t. We differentiate performance by giving more opportunities and greater recognition to better performers.

How will we give out bonuses fairly?

This is another common concern. We have this view that if the bonus is determined by a number out of five – then it’s more objective, less arbitrary. It isn’t. If a manager is determining a rating, then the bonus pay out is determined by his or her judgement. This is just as subjective as a line manager having discretion over the amount of money they should get. The majority of companies who have got rid of ratings have given line managers the autonomy to make decisions about pay and bonuses. And this is the right course in my view. We should treat them as grown-ups who are capable of managing the staff budget as well as the other budgets they have. If we are really worried, then we can use calibration sessions to sense check their decisions. These sessions can be much more helpful when discussing additional factors such as market rate and what matters to the individual, than the ratings calibration sessions we’ve held in the past when we fight over who should be a 3 or 2.

How will we know if managers are doing it properly?

Like many of our bureaucratic processes, the cumbersome appraisal system was typically designed to compensate for managers who can’t or won’t manage their people effectively. HR has felt good because at least our people are getting one feedback conversation a year, for example. Ratings sometimes provide some kind of reassurance to HR that managers are having ‘proper’ performance conversations. Sadly, this is not the case. Great performance conversations shouldn’t end in a number out of five or a ‘meets expectations’ statement. When you exclude the top percentage, we’re managing to demotivate the majority of the people who work with us – even if the pre-rating conversation wasn’t bad! The way we get to know whether our managers are helping their people to improve their performance is to ask the people themselves. Instead of looking at our appraisal completion rates or, God forbid, our ratings distribution curves – we can be reassured or worried by asking people via surveys, focus groups or through conversations.

What will we do about poor performers if we don’t have ratings?

And finally, the question that will sometimes come up – although, thankfully, it’s asked less often than it used to be – What will we do about poor performers if we don’t have ratings?

Behind this concern is the (honestly) absurd reasoning that we should apply something that doesn’t work, that often de-motivates our people and frustrates our managers across the whole organisation – simply so we can get to the 2-3% of people who perform badly. Seriously?! If you have a poor performer, then document the hell out of that situation. But let’s not design around the lowest common denominator and make everyone document an annual conversation, that doesn’t drive better performance, just to have the paperwork for the tiny percentage that might get nasty and legal.

There are consequences to giving up ratings, sure. For example, we have to be able to explain and get support for an approach that isn’t as clear cut or clinical as an annual appraisal. We also have to re-focus our efforts away from ensuring compliance with a system and onto coaching for better conversations. But dropping them will help build better performance and higher motivation. Which is kind of why we introduced ratings in the first place isn’t it?!

PS: If you want to help line managers have better conversations with their team, why not check out The Conversations Toolkit. It gives them tips, techniques and conversation starters to help them with the key one-to-one’s they’ll have with their team.

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