This article was originally published on HRExaminer and is republished here with their permission.
How to Measure Performance Without Using Traditional Ratings
Should you drop the traditional annual performance review ratings (Meets Expectations, Exceeds, etc.)?
The point of a performance management system is to “manage employee performance” so you still need a system to differentiate and measure performance effectiveness. But, traditional performance rating schemes are too limited to make meaningful distinctions. If this weren’t the case, then we wouldn’t continue reconfiguring the categories and definitions every few years hoping for, but never achieving the ideal outcome. Think about it…in your HR career, how many rating schemes have you tried?
Let’s step back and agree with the dictionary definition of the word “rating”: “a classification or ranking of someone or something based on a comparative assessment of their quality, standard, or performance.” So, let’s consider this definition and make the term “rating” broader than traditional rating categories. Ratings, as we know them, will continue falling short of accurately describing human performance (no matter how often you reword, reconfigure, add to or remove the number of rating categories).
An Alternative to Ratings
If you want to evolve your system, but have been stymied by the ratings issue, then the good news is this: you can still measure performance without a traditional rating system. I encourage you to try the Employee Performance Continuum (it’s simple, low-tech, and can be drawn on a napkin.
The Continuum can be used for a snap-shot-in-time measurement of an employee’s performance on the two performance dimensions:
- Work Results (combination of job responsibilities, goal attainment, and requisite technical skill-set)
- *Observable Behaviors (tone, approach, actions you can “see” and describe an individual doing)
Your managers can visually sort their employee’s into five categories:
- Top Right: High Accountable Employees (ranging between the steady/reliable contributors to individuals who have made a significant impact on your organization/business)
- Lower Right: New to Role and Making Steady Progress (new hires and promotions)
- Lower Right: Off Target Work Results, but On-Target Behaviors (despite making an earnest effort, has met only some goals and job responsibilities; leaving others to pick up the slack)
- Top Left: On-Target Work Results, but Off-Target Value Detracting Behavior (the impact of the behavior leads to disruption, depletes the time and energy of others, undermines team effectiveness, and slows the progress of work)
- Lower Left: Combination of Off-Target Work Results and Off-Target Value Detracting Behavior
For over 15 years, I’ve been sharing the Continuum with managers and HR professionals and have collected significant data through workshops and calibration sessions. Here’s the percent range when a sample group of employees are plotted (30+ people):
40-65% High Accountable
10-15% New to Role and Making Steady Progress
10-15% Off-Target Work Results, but On-Target Behaviors
15-25% On-Target Work Results, but Off-Target Value Detracting Behavior
8-10% Combination Off-Target Work Results and Off-Target Value Detracting Behavior
Of interest, regardless of the industry or organizational type, these numbers are consistent. Ideally, if your organization is managing employee performance, then the High Accountable category target should be around 75% – 80%.
How Often Should You Measure Performance?
I advise doing this process twice yearly (once outside of salary administration time), and with input from peers and the second level supervisor to help counter subjectivity. During a recent calibration session using the Continuum, a senior executive commented that the model forced managers to articulate their view while also enabling a robust discussion with peers; which lead to new and expanded viewpoints.
Tip: The 9-Box as a Performance Metric
A note about the 9-Box, a commonly used measure of Performance and Potential. The 9-Box grid can be a useful tool for succession planning, but you don’t need the dimension of “Potential” for performance management purposes. Simplify the process, by removing the “Potential” dimension and break “Performance” into the components of “Work Results” and “Observable Behaviors.”
So, continue measuring employee performance, butreplace the “Exceeds Expectations” type categories that are too narrowly defined. Experiment with the Employee Performance Continuum. Share it with several managers and ask them to plot their employees and explain their thinking behind the plotting. This is a low-risk way to see how managers react to and use the tool.
What are you using in your organization to measure employee performance? Have you found an alternative to ratings?