Performance management is used to ensure people are performing their jobs in the right way.
In order to be effective, performance management must differentiate between more and less effective employees.
The key to designing
effective performance management processes is to clarify exactly what the process is expected to
accomplish. Only then can companies make appropriate design decisions to ensure that
performance management does what it is intended to do.
If performance is defined in terms of objective, clearly
measurable goals, then performance evaluation is largely just a matter of systematic goal
measurement. For example, some jobs are evaluated entirely based on the amount of revenue
generated through sales. The only thing …show more content…
The advantage of 5-point or 7-point rating scales
is they have a midpoint and allow for enough differentiation to be effective without over
complicating the rating process. Consider the following illustration of how a manager might be
instructed to use a 5 point scale. Assume a higher rating is associated with higher performance,
although it probably does not matter if a 5 is good or bad as long as the meaning of the ratings
is clearly communicated. The most effective way to use a 5-point scale is to rate most
employees as 2’s, 3’s or 4’s (solid performers at different levels of effectiveness) and treat the 1
and 5 as exclamation points that indicate a clear need for action with regard to an employee’s
performance. Employees rated a 1 need to quickly improve or be managed out of their current
role. In other words, performance is such a problem the company needs to act now to address
it. Conversely, employees rated a 5 are so good the company should aggressively work to retain
and leverage their capabilities by providing them with significant rewards or career opportunities.
The key is to create real implications for …show more content…
The problem with scales with 9 or more rating points is they create inconsistency
without increasing measurement precision. Most managers cannot effectively differentiate
between more than 7 levels of performance and so nothing is gained by giving them more rating
points. And because some managers will tend to use higher ratings than others, increasing the
range of possible ratings increases the inconsistency of performance ratings across managers.
The accuracy and value of
performance ratings increases when companies define rating scales using descriptive labels
instead of numbers. Table 3 provides example of labels that have been used with 5 point scales.
There are two reasons why descriptive labels are better than numeric labels. First, they define
what the difference is between rating categories. This helps managers determine whether
someone should be a “3” or a “4”, and so forth. Second, descriptive labels make it easier to
communicate the results of performance evaluations to employees. It is much easier and
meaningful to tell an employee they are a “valued contributor” than to tell them they are a
In order to be effective, performance management must differentiate between more and less effective employees.
The key to designing
effective performance management processes is to clarify exactly what the process is expected to
accomplish. Only then can companies make appropriate design decisions to ensure that
performance management does what it is intended to do.
If performance is defined in terms of objective, clearly
measurable goals, then performance evaluation is largely just a matter of systematic goal
measurement. For example, some jobs are evaluated entirely based on the amount of revenue
generated through sales. The only thing …show more content…
The advantage of 5-point or 7-point rating scales
is they have a midpoint and allow for enough differentiation to be effective without over
complicating the rating process. Consider the following illustration of how a manager might be
instructed to use a 5 point scale. Assume a higher rating is associated with higher performance,
although it probably does not matter if a 5 is good or bad as long as the meaning of the ratings
is clearly communicated. The most effective way to use a 5-point scale is to rate most
employees as 2’s, 3’s or 4’s (solid performers at different levels of effectiveness) and treat the 1
and 5 as exclamation points that indicate a clear need for action with regard to an employee’s
performance. Employees rated a 1 need to quickly improve or be managed out of their current
role. In other words, performance is such a problem the company needs to act now to address
it. Conversely, employees rated a 5 are so good the company should aggressively work to retain
and leverage their capabilities by providing them with significant rewards or career opportunities.
The key is to create real implications for …show more content…
The problem with scales with 9 or more rating points is they create inconsistency
without increasing measurement precision. Most managers cannot effectively differentiate
between more than 7 levels of performance and so nothing is gained by giving them more rating
points. And because some managers will tend to use higher ratings than others, increasing the
range of possible ratings increases the inconsistency of performance ratings across managers.
The accuracy and value of
performance ratings increases when companies define rating scales using descriptive labels
instead of numbers. Table 3 provides example of labels that have been used with 5 point scales.
There are two reasons why descriptive labels are better than numeric labels. First, they define
what the difference is between rating categories. This helps managers determine whether
someone should be a “3” or a “4”, and so forth. Second, descriptive labels make it easier to
communicate the results of performance evaluations to employees. It is much easier and
meaningful to tell an employee they are a “valued contributor” than to tell them they are a