This article on annual employee review ratings was originally published in November 2016. Relevant employee review statistics and associated content were updated November 2020.
What is an employee rating?
Employee review ratings are used in performance management processes to quantitatively address performance. These are easy to administer but can backfire if used as the only indicator or assessment of performance.
Traditional annual performance reviews sometimes miss the mark on specific feedback, timeliness, and progress. 45% of HR leaders do not think annual performance reviews are an accurate appraisal of employees’ work, and 87% of organizations are unsatisfied with their performance review process.
Relying solely on annual reviews is becoming a business process that is unable to keep up with current employee development demand. It’s time for HR Departments to adapt their performance review processes to better fit the current work environment. Ratings are one effective way to do that.Over the past year, 62% of the workforce worked #remotely at one time or another. @ClearCompany says your annual employee #reviews need to be adapted to support a virtual work environment:
Annual Employee Review Ratings: Are They Effective in a Virtual Landscape?
There’s been considerable debate lately on whether organizations should forgo their current employee review ratings. Supporters of the argument to do away with ratings say that they are an inaccurate performance indicator throughout this tumultuous year. In contrast, others believe that ratings provide much-needed transparency and clarity in our current environment.
Are employee ratings antiquated?
While some decry employee review ratings as obsolete, the concept itself is not inherently bad. Stanley B. Malos, J.D., Ph.D. writes that performance appraisal ratings should have the following characteristics in order to avoid being outdated or discriminatory. Ratings should:
- be standardized for all people within a job group
- provide notice of performance deficiencies, and opportunities to correct them
- provide written instructions and training for raters
- require thorough and consistent documentation from raters that include specific examples of
- performance, based on personal knowledge
- use multiple diverse and unbiased raters
- be formally communicated to employees
- provide access for employees to review appraisal results
- provide formal appeal mechanisms allowing for employee input
- establish a system to detect discriminatory effects or abuses of the system
One thing that can be certain — the way managers approach ratings needs to be adapted. In our current landscape, ratings need to account for a more objective benchmark of success. Success and performance can be hard to measure from a remote distance. Many intangible achievements, such as enhanced communication, increased efficiency in processes, and increased responsibilities, can often go unseen.
Ratings can be an excellent way to show a snapshot of your employees’ performance but in no way should they be the entire view when it comes time for performance reviews. In your performance review discussion, go beyond the rating and let your employee have the opportunity to talk about the accomplishments they’ve achieved and the struggles they’ve been facing. You’ll gain a deeper understanding of their work quality over the last few months and can more objectively rate their performance.
Navigating Employee Review Ratings During Remote Work
Over 42% of all employees are continuing to work remotely. Over the past year, 62% of the workforce worked from home at one time or another. Managers might find it challenging to provide insightful feedback on daily tasks and activities.
However, 360-degree feedback — asking peers to help review employees — may help to mend any gaps in your performance review evaluations. There are many benefits to using 360-degree feedback in your performance reviews.
Tip: Limit your 360-Degree reviews to a smaller pool of people. While peer reviews are integral for organizational success, gathering feedback from a large number of individuals can be time-consuming. Instead, try gathering input from employees that work closely with one another and have good insight into their daily work activities.
Should I use employee review ratings in my organization?
Every organization is different and needs a unique approach to performance management. Ratings, while not alone a good performance management system or process, can help kickstart real-time feedback, assist leadership in keeping a pulse on worker sentiment, and identify issues during chaotic periods of time.
As organizations navigate the new normal during COVID-19, the emphasis on consistent and specific feedback may be more important than ever before. 65% of all employees want increased levels of feedback on their performance and providing that consistency can go a long way during a time of relative instability.
Ratings can actually help here. Because many companies are moving, albeit slowly, to more frequent reviews, but struggling to move away from the annual review completely, ratings can be a great way to make performance conversations more frequent without the administrative burden of a full performance review. Consider it a sort of pulse survey, designed to help spur discussion.45% of #HR leaders do not think annual #PerformanceReviews are an accurate appraisal for employees' work. See why @ClearCompany says it's important to modify your performance management processes to support the current work environment better:
Consistent and high-quality feedback can increase loyalty to the company and motivate your employees to work harder. Your efforts to adapt your performance management processes are well worth your time — 83% of companies have cited an increase in the quality of conversations between their employees and leaders due to effective performance management changes.
Bonus Content: See why Continual Conversations are more effective than Annual Employee Review Ratings
Where Do We Start with Employee Review Ratings?
What kinds of rating systems exist?
Many companies use a 5-10 point grading system in order to easily tally multiple ratings from supervisors and coworkers. However, other companies have used the Likert scale, a poor/excellent spectrum, and ordered list. Here are some other types of rating scales:
- Yes or No
- Descriptive (agree/disagree)
Many organizations are ditching the annual review to favor more frequent, effective performance management discussions. But that doesn’t mean that you need to start all over again.
Take a step back and determine what aspects of your current processes continue to work for you and your employees.
- Are the questions you are asking still relevant and insightful?
- Is the way that you rank performance still applicable in a remote landscape?
- Does your performance appraisal process account for the unique changes in the workplace?
- Can this scale as your company changes and grows?
- Do ratings motivate or discourage your employees?
By finding the answers to these questions, you can highlight the areas of your processes that could use a facelift and open up the conversation with employees and executives alike about what should stay, what should stop, and what should be modified for the current landscape.Tip: One great way to gather information is by encouraging your employees to fill out anonymous surveys. Employees are more likely to answer honestly about issues and gaps in your system if they do not fear potential retribution.
As you analyze your annual employee review ratings, ensure that your process supports both you and your employees. In these unprecedented times, your performance discussions should be about strengthening your organization’s culture and reinforcing its values, rather than highlighting poor performance. By demonstrating compassion for your employees, you can foster a meaningful workplace relationship, leading to higher retention rates, which will improve your bottom line.
Example Employee Review Rating Scales:
- Unsatisfactory | Needs Improvement | Meets Expectations | Exceeds Expectations | Distinguished
- Needs Improvement | Meets Expectations
- Does Not Meet | Meets | Exceeds
- Below Level | At Level | Above Level
- Needs Attention | Satisfactory
- Unacceptable | Needs Improvement | Acceptable | Good | Excellent
- Did Not Meet Expectations | Met Some But Not All Expectations | Fully Met Expectations | Exceeded Expectations | Significantly Exceeded Expectations
- Area of Deficiency | Inconsistently Meets Standards | Meets Standards | Meets High Standards | Regularly Exceeds High Standards
- Needs Improvement | Consistently Meets Expectations | Exceeds Expectations | Strongly Exceeds Expectations | Superb
- Unsatisfactory | Meets Most | Fully Meets and Sometimes Exceeds | Consistently Exceeds | Far Exceeds
- Never | Sometimes | Often | Always
- Not Often Enough | From Time to Time | Most of the Time
- Minor Contribution | Important Contribution | Critical Contribution
- Low Performer | Developing Performer | Highly Valued Performer | Top Performer
- Unacceptable Performance | Partially Successful | Fully Successful | Superior | Distinguished Performance
- Poor | Below Average | Good | Very Good | Outstanding
ClearCompany’s Performance Management suite supports all organizations in their talent management goals. Our fully-customizable solution will transform your performance discussions with assistance in gathering and analyzing 360-Degree reviews and real-time feedback. To learn more about our product, schedule a demo today or reach out to one of our experts.