Odd Approach to Performance Appraisals

An article entitled "Big-Picture Performance Appraisal" by Paul Falcone was published in the August edition of HR Magazine.

Mr. Falcone is apparently a best-selling author and I guess he's well respected in the human resource field...

...but, I was taken aback by what he was proposing in this article about how to look at deciding on an individual's overall rating. He suggests that you go back to the old-school bell-curve concept.

He argues that each unit in the business should first rate itself on a 1 to 5 scale, with a 1 representing significantly under performing, a 3 performing at a 100% level, and a 5 representing significantly over performing. Let's say a given unit like sales rates its overall performance a 4.2, Falcone says that the overall average total score of all employees in the unit should also equal 4.2. That means if you rate some people over 4.2, you need to make sure others are rated below that number.

I guess the logic is that these two numbers only make sense if they are equal. This is bass ackwards to me--you're supposed to get overall performance from the bottom up not from the top down when it comes to rating an individual. In my mind, this doesn't reflect the actual performance of the individual.

If an individual's overall score is artificially restricted to their business unit's overall score, how is this fair to the individual? More importantly, how can management look at people in the same position across the company and do an accurate comparative analysis?

Another strange point in this article is that Falcone suggests every business unit and everyone should be striving to be rated a 5 overall! If a 3 is considered a 100% performance level, it would seem to me that most people would be striving to be that "A" employee or "A" business unit. Sure, it is possible that some employees sometimes perform above expectations, but rarely should the performance standards be set so that the employee consistently exceeds expectations for all performance measures.

If employees are rated 4's and 5's then they are not being challenged enough. I coach my clients to set the performance standards for each performance measure in a way that asks the employee to stretch even to be rated a 3. If an employee is consistently rated 4's and 5's, how to they get challenged to get to their next level?

Falcone also fixates on the overall score as the number to focus on when filling out the appraisal. Here's another area where I disagree with his thinking. Best practices says you look at each performance measure on its own and score it based on the performance standards for that measure.

At the end of the process an overall score is calculated using the weighted scores of each measure. I suggest you take that one step further...

...instead of showing the overall number on the 1 to 5 scale, you convert it to a %. Why do this?

Well, it's natural for everyone to want to be rated a 5 instead of a 3 since a 3 is half-way down the scale giving it a connotation of an "average" rating when in fact a 3 represents a 100%, or "A", performer .

By setting the right performance measures for each position and for each employee and rating them on these measures, you will be aligning your human capital to maximize your organization's performance. Don't back in to numbers set at the top. That's the only way you are really going to know how your employees are performing so you can use those results for organizational development, succession planning, and other human-capital related actions.