How to Make a Numeric Employee Ratings System Work

three young people holding up judges' rating cards
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Numeric ratings are a method of assessing your employee performance over a rating period. If not implemented properly, numeric ratings can cause confusion, stress and internal conflicts between employees.

Modern corporations are beginning to move away from numerical performance ratings to other methods. Even with the pressure from academics and corporate minds touting the antiquated value of this performance measuring system, you can still use it to promote a productive and happy workforce.

Reasons to Use Numerical Rating

According to Dick Grote, author of The Secrets of Performance Appraisal: Best Practices from the Masters, rigorous assessments of talent and potential are helping companies make major progress in developing cultures of performance.

Stanley B. Malos, J.D., Ph.D. makes six Substantive Recommendations for Legally Sound Performance Appraisals in Current Legal Issues in Performance Appraisal. These six recommendations set the stage for what makes an appraisal rating system sound and potentially motivational.

According to Malos, appraisal criteria should:

  • be objective rather than subjective
  • be job-related or based on job analysis
  • be based on behaviors rather than traits
  • be within the control of the rated employee
  • relate to specific functions, not global assessments
  • be communicated to the employee

Malos cites procedural recommendations for legally sound performance appraisals as well. His recommendations are that procedures should:

  • be standardized for all people within a job group
  • provide notice of performance deficiencies, and opportunities to correct them
  • provide written instructions and training for raters
  • require thorough and consistent documentation across raters that include specific examples of performance based on personal knowledge
  • use multiple, diverse and unbiased raters
  • be formally communicated to employees
  • provide access for employees to reviews appraisal results
  • provide formal appeal mechanisms allowing for employee input
  • establish a system to detect discriminatory effects or abuses of the system.

Numeric Rating System Guidelines

The following ten guidelines will help performance measurement and rating system which is motivational rather than confrontational.

  • Conduct a thorough job analysis to provide you with the criteria for measuring performance
  • Develop effective measurements that tell people what they are doing well, and what they are not
  • Establish straightforward, honest criteria that tell people exactly what they must do to achieve a particular numeric rating. Much of the time people are reviewed and then given general instructions on how to improve
  • Place a greater emphasis on the identification and assessment of competencies
  • Communicate the established criteria to the people who need the information to perform effectively. If the information translates poorly to a number, communicate a picture of outcomes expected that is understandable and more quantifiable
  • Obtain employee input when establishing the criteria and the measurements for the numeric ratings
  • Review the employee’s progress on the defined criteria, goals, and competencies regularly. Monthly intervals are good, but you should try to establish more feedback sessions for those that may need it
  • Avoid the "horns," or "halo" effect. If an individual meets all established criteria for two months and then misses the target for the third month in a quarterly reporting period, take into consideration all three months
  • The employee needs to see and read their performance ratings and rankings and understand how the conclusions were reached
  • Put the responsibility of reporting accomplishments on the employees by requiring them to list their accomplishments during reviews for comparison

An example of criteria for a manager’s appraisal and success could include the following statement achieving the highest marks they would give. Notice the picture painted by the manager:

For the highest marks you must work to increase customer satisfaction by 50% as measured by customer comment cards; increase the profitability of the snack shop by 20%, and present an environment of cleanliness and efficiency in which no paper litters the floor, tables are wiped clean and cleared as soon as customers leave, and trash is emptied prior to trash exceeding the containers.

Criteria were also established and communicated for a mid-range numeric rating, and a poor numeric rating. This manager made sure there were no questions on expectations for performance marks.

Involve the Employees

Employees need to take responsibility for their ratings as well. Many do not remember the criteria for higher marks, didn't pay attention or didn't understand the rating system.

At the same time, employees should be keeping track of their own achievements and accomplishments or lack of thereof. A manager could have an employee turn in a list of their accomplishments for the period so that the manager can compare the information they have to the information the employee provides.

This gives the manager a more clear picture of what the employee thinks of themselves and shows how well they understand the performance measurement system. It also holds the employee responsible for ensuring their achievements are noted during evaluation and places the obligation for accuracy on the employee.

If employees are able to access their data and measure their own performance, they should be able to see for themselves how they are doing. In the example from the manager described previously, if an employee was able to see that they had only increased customer satisfaction by 48%, they would not be surprised at their marks during review time.

If data is available to employees throughout the period, the manager is then able to ensure the employees know the steps to take to improve their ratings by giving continuous feedback.

When employees and managers both are able to access their data, they can have a two-sided discussion on their marks. Both can see how the employee performed, and agreements can be made on an accurate numerical rating for each employee.

Final Thoughts

Done well, performance criteria and ratings can contribute to a positive and motivating experience for organization members. The presence of numeric ratings and performance criteria in your performance management system can help you formulate the culture you need for success as an organization.

When employees know what is expected of them, and are involved in their own rating they take ownership of their performance tracking. They experience very few surprises and have clear goals to work toward. They know the rewards and recognition they will achieve.

If you set a numerical rating system for performance measurement, be sure the top marks are attainable. It is very common in this type of system for management to claim that there is no perfectly rated employee—meaning there will never be a top marked employee.

If your system rates employees on a scale of five, and you have an employee that accomplishes everything on the published criteria, give them the rating of five they deserve. A 4.9 rating for someone that accomplished everything will be demoralizing and cause employees to not strive for higher ratings.