I’ll never forget sitting through my first performance rating meeting. I was employed by a Fortune 500 firm where I was lucky enough to be on the training and development team. I was there less than a year but long enough to participate in the annual performance review process.
My boss read through an endless list of “competencies,” systematically checking off each one as he gave me my scores. He summed it up by saying my overall rating was “Very Effective.” In our system, there were two grades above and two below this level, from “Outstanding” at the very top to the frequently fatal “Needs Improvement” at the bottom.
When I asked him how he arrived at “Very Effective,” he explained that grades were assigned on a bell-shaped curve. Each category had a mandated percentage of occupants. So, for someone to go up, someone else had to go down. He also mentioned that my entering the organization resulted in downgrading more than half of my peers. In other words, my success meant their failure. Great.
Welcome to The Hunger Games of performance ratings
I left that performance evaluation with the realization that my so-called “teammates” could be more accurately described as my competitors. It explained the looks I got from colleagues when I received positive public recognition. Welcome to The Hunger Games.
I didn’t stick around long enough to be a true casualty of the game. Had I stayed, it would’ve happened eventually. After all, an HR generalist would never be in the running for CEO of a multibillion-dollar oil and gas company. And in a kill-or-be-killed culture such as that one, being replaced by a younger, faster, brighter foe (posing as a “teammate”) was inevitable.
What I eventually realized was that the system I was in created a surreal Darwinian universe where 90% of the employees felt like losers and the other 10% were paranoid. The only way to go up in rating was for someone else to go down.
Why performance ratings don’t work
Grading systems don’t foster conversations — they end them. Especially today, when the vast majority of organizations that once used grading are running lean and have teams composed of smart, dedicated employees who are not motivated to compete internally for survival. Nowadays, organizations are more focused on attracting and retaining great talent rather than trimming staff.
And here’s another problem. Performance ratings focus on the past. By their very nature, they look at the world through a rearview mirror. They don’t ask questions such as, “Can we improve the way people perform by using effective coaching and intrinsic rewards — personal growth and a sense of progress?”
And lastly, too much time is spent on the wrong things. The average manager spends more than 200 hours a year on activities related to employee reviews, including performance ratings and delivering results. Not to mention, forms are often completed simply to fit into some framework and used to guide the performance rating discussion. The result? Little time is left for managers and employees to have meaningful dialogue about what really matters to them.
So, let’s talk about what you can — and should — do instead of performance ratings.
Five ways to quit performance ratings once and for all
Rating and ranking, like The Hunger Games, is an enormous and all-consuming ritual. It also defines the culture in which it is practiced. For many, it’s hard to stop.
So, what can we do to put an end to The Hunger Games at your company?
1. Follow Deming’s advice.
W. Edward Deming, the father of the modern quality movement, was a strong and vocal opponent of both rating and ranking. He called the ritual one of the “Seven Deadly Diseases” Americans were spreading to other countries. When asked what to do instead, his advice was straightforward: “If your system does more harm than good, just stop doing it. That alone will be an improvement.”
2. Stop evaluating and start coaching.
Consider adopting Catalytic Coaching or another program that’s built around dialogue without the distraction of labels or grades — and without the negative drama of pitting employees against each other.
3. Consider succession planning.
Make a list of people who are “silly enough to want more responsibility and good enough to earn it” and place their names under the jobs they aspire to. Describe them as Ready Now, Ready in two to three years, or Ready in five years. Rank this list in isolation. Do not pit them against others who are happy doing what they’re doing in another job.
4. Work your performance problems.
You don’t need to grade everyone to determine who the underachievers are. If someone fails to meet expectations in their position or they do something so egregious that it makes you actively consider firing them, talk to them. Confront them about their performance gap and give them assistance to quickly resolve it. If they can’t or won’t, take action and move on.
5. Challenge your stars.
Identify your highest potential employees and get them to ask you to be tougher on them than you are on their less stellar peers. Give them the best salary treatment you can, but raise the bar in terms of the skills you challenge them to acquire. They’ll stick with you longer, rise faster, and go further with the extra attention and constructive guidance.
Let’s wrap up
There’s something inherently wrong with the ritual of rating and ranking practiced by some of the world’s largest and most prestigious companies. First, the negative way it makes employees feel. Second, the complete failure of this elaborate and labor-intensive process to yield anything worth paying for, starting with a behavioral change that impacts the business.