On paper, it is easy to see why rating-based performance reviews are popular. They are easy to do, quick, and fairly painless. Automated rating-based performance reviews further simplify the whole process.
But does the simplicity of ratings-based reviews mean that they are useful as well?
Not really. And here is why.
Ratings are reductive
Bringing an employee’s performance down to a number is reductive. It serves no purpose and does not really encompass the breadth and width of an employee’s performance. If an employee gets a rating of a 5-star, it shows that the employee has done excellent work. What kind of excellent work did that employee do? How did he merit that rating? A rating-based system cannot answer these questions because it is used to compress an employee’s performance into a number. It was not built to put out a personalized summation of an employee’s work with examples to highlight the good and bad.
Just as a 5-star rating does not give you the complete picture of an employee’s performance, a 1-star rating is not going to tell you anything other than the fact that an employee who receives a 1-star rating is a poor performer. It doesn’t tell you if the employee is struggling with the job, feels overwhelmed, or is not suitable for the job. Performance reviews help in identifying problems and then providing solutions to them.
They are actually subjective in nature
You can define a rating scale as much as you want. But at the end of the day, how each person interprets a rating scale can vary wildly. All managers have certain criteria for what they perceive as good work. Having set criteria for good work is not wrong. However, trying to apply those criteria to a rating scale is what causes a problem. It can ensure that two people who perform similarly can get drastically different ratings, simply because their managers perceive the rating scale differently.
They are not meant to be standalone
When you use only ratings to review performance, they fail because they are not meant to be standalone. In order for ratings to work, they need to be combined with feedback, personalized reviews, goals, objectives, etc. All these additions are not extraneous. Rather, they help managers and employees review performance more effectively.
Ratings have a way of completely destroying an employee’s morale and motivation to work. Companies that use ratings-based reviews alone run the risk of alienating good employees, killing employee collaboration, and doing away with team spirit.
In conclusion, do not count on ratings alone to review performance. If you absolutely want to use ratings, include feedback and personalized reviews as well and most of all, ensure that everybody is on the same board.
Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2023.