The very word ‘ratings’ is polarizing, especially in the context of performance appraisal forms. But like any aspect of performance appraisals, ratings have both pros and cons.
Ratings can be very helpful in the sense that they can quickly help you categorize and sort an employee’s skill sets. They can help show an employee the areas in which he or needs more improvement. They can also be used to boost employee morale and motivate them to better.
Ratings can also force managers to have uncomfortable realizations they have been putting off for a long. For example, if an employee named Bob consistently has been getting low ratings during the past four evaluations, then the manager question is going to have to face facts. Bob may not be a good fit for the organization. Bob possesses many good qualities, but maybe he does not possess the qualities this organization needs.
Conversely, managers might also feel like if don’t give an employee good ratings, they are being mean or bad.
There is, however, one thing you shouldn’t do with ratings. Don’t ever link them to compensation or pay rises. There is no upside to doing this. It is just asking for trouble.
You might think you are motivating your employees, but in truth, you are just pitting them against each other. Compensation, bonuses, and raises are all separate from performance appraisals. This also serves to foster feelings of inequality. For example, if a person who is rated 4 out of 5 gets a raise based on his rating, then a person who gets 3.5 out of 5 is definitely going to get lesser raise. This may be despite the fact that both employees have worked equally hard and have accomplished different things.
Also, it sends out the message the higher your rating is you are somehow better than the others. Even though this might not be the intention, it is hard to prevent employees from thinking so.
The fact of the matter is ratings can be good or bad. It all depends on how you and your organization define them and use them.
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