Performance Appraisal Systems That Rank, Rate and Limit

Human Resources, Management and Work Related Questions and Answers

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Reader's Question:

I work for a large corporation that has a performance management system where only a certain percentage of people can get the highest ratings. Two years in a row, my manager (and her manager) have agreed that I should receive an Exceeds Expectations. This rating is associated with a higher raise and a higher bonus amount.

Two years in a row, this rating recommendation was downgraded by those above them to Achieves Expectations. I was told this wasn't personal; it's just the numbers. (Susan adds: In similar systems, only a certain percentage of employees can rank in each numeric rating category.)

I work in a sales environment where the top salespeople automatically get the highest ratings. I also don't report directly to the VP (and I assume those who do have an easier job of getting the rating they deserve). My reviews both years were glowing. Written on them were my manager's comments that she recommended I receive an Exceeds Expectations rating. Two years in a row, it was downgraded.

I feel very badly about working for a company with this type of performance appraisal system. When I asked my manager what more I could do to get to keep the rating they submitted for me, she told me, nothing. There is nothing more she can do either. She can't get blood from a stone.

As an employee, I cannot see any benefit for a company in having a system like this. If someone does have good people, they should be able to rate them as such. If they have many good people, then all the power to them. The good people should be rated accordingly and they've done their job as hiring managers well.

Are there other companies with this type of system that you know of (this is my first experience with this)? Why do they have systems like this? How would you go on being the top performer, that you know you are when the rating system is so unfair? Any words of wisdom would be appreciated.

Human Resources Response:

If you read through my materials on performance appraisal and ranking systems, you know that I totally disagree with them. They are a method used by companies to contain costs and falsely limit the availability of high ratings, a practice of which I also disapprove.

Philosophically, proponents of such a system, which usually includes a percentage factor that specifies the percentage of employees who may attain each rating, would argue that it makes performance raters more discerning. Only exceptional employees are highest rated and unexceptional employees fall to the bottom of the rankings.

They might also say that such a system makes certain that true differentiation of performance is expected and rewarded. (As a new proponent of rating and ranking, one 30,000 employee division of a large corporation found that 96 percent of its employees had received the highest rating prior to the new system which divided level of rating by - 10 percent - exceptional, 15 percent - exceeds expectations, 60 percent - meets expectations and 15 percent - below expectations.)

I don't know what more I can say. Many companies do this, to their detriment, in my opinion. All I can suggest to you since you don't appear to be in a position to affect the performance appraisal system is that you stealth job search to find a company that lets your obviously many talents and contributions be rewarded as they deserve.

Consider talking with your manager about using more specific and quantifiable examples of your contributions and efforts on the appraisal document - the piece I have often observed is missing - in a competitive employee ranking exercise.

If your company has a method for soliciting employee input, you might give yours about this performance appraisal process. But, if your manager is unable to impact the final decisions, in competition with all of the other managers for their employees, there is not much more that you can do.

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