The ratings game
Credit to Author: BENEL D. LAGUA| Date: Thu, 20 Feb 2020 16:54:51 +0000
Assessment season is here again. The decisions on who lands on top and who will be cast away in the rock bottom is both a challenge and a burden to raters. This rating game is usually bombarded with intrigue, jealousy and misconceptions. In the very personalistic Filipino culture, performance reviews can lead to exhiliration for those who are ranked in the higher tier to mixed feelings of unappreciation for those receiving average to low scores
We all grew up in an environmment where some grading system is a given. From childhood in school, we have been introduced to this rule of standards that this point and this mark or this grade qualifies you to be the best or worst. In statistics, there is a probability theory that assumes a normal distribution for scores. In layman’s term, this is also known as the bell curve.
The bell curve system of performance appraisal is a forced ranking system where an organization segregates the best, the average, and the mediocre or worst performers ostensibly to nurture the best and discard the worst. In this system, employees are divided into classes of performers. One example is the standard three groups – high performers (top 20 percent), average performers (middle 70 percent) and the non-performers (bottom 10 percent). The advantage of this system is to identify the major contributors and reward them substantially. It is also an avenue for the management to deal with the issues promptly. It is intended as a motivational tool for productivity.
The disadvantage of this system is the pressure for the manager to give specific ratings just for the sake of the bell curve requirements. In the model, there is a limited number of employees to be listed in the top performers’ category. But in a well-performing sector or group, a number of employees who performed well will have to be re-categorized in the lower tier. And this could have some demoralizing effect.
At times, it can even be discriminatory. There was a lawsuit in 2017 against Uber by a former engineer who felt the company’s ranking system was discriminating against women for lower rankings meant lower pay and fewer promotions. A Harvard Law School study found that women are 1.4 times more likely to receive subjective feedback in their performance reviews that have nothing to do with how well they can do the job (Monica Torres, Ladders).
The system could also lead to negative corporate culture. Instead of people working together for the common goal, they would treat each other as rivals. There is also a view that sometimes, the rewards for the top performers are not substantive enough that make the ranking truly counter productive.
Rating is actually a burden to many mangers. If managers will be strict in the ratings, majority of the employees may receive low scores, demotivating them. On the other hand, leniency will mean that most employees receive high marks and the intent to pinpoint real performers is lost.
Going back to the purpose, the very essence of this forced ranking is to analyze and address through human resource interventions the strengths and areas for improvement of the employees by placing them in a position where they can exemplary utilize their capabilities. Some companies continued using bell curve even to the extreme. Others such as Microsoft have abolished this employee evaluation system and started to follow a new approach that will make it easier for the managers to allocate rewards in a manner that reflects the unique contributions of their employees and teams.
Government has adopted a performance based bonus system that requires the implementation of a bell curve. Is it delivering on its desired results? Anecdotal evidence have reported subordinates who feel betrayed for receiving average marks and highly-ranked performers who are not happy with the incentives given. The system should probably be subjected to further scrutiny.
Truth is, we cannot please everybody. Most managers want to be objective and honest as possible with how they rate their employees. However, several factors may also affect this management decision such as workload parity, job complexity, results vis-à-vis efforts, and behavioral attitudes. Still, as a superior tasked with rating subordinates, there must be effort to be fair and judicious, even if sometimes it could not be understood by those who do not see the “big picture.”
As a professor and performance evaluator, I am very careful in giving a high mark or a perfect score. An outstanding mark must truly exceed normal expectations. I believe there is always some room for improvement. I don’t want my students or staff to be lulled into a false sense of complacency. The cliché says “nobody’s perfect” and probably, it is. We need to challenge even the good performers. While we recognize what has been achieved, we must always find ways to improve ourselves and find the best version of the work we need to deliver.
In the end, the grade written in the performance management form or school report card is just a number. It does not define who one really is. The two most important things one should focus on is making a contribution in whatever organization you are in, and finding the job satisfaction that fits our personality profile so that our work becomes not just a task, but a vocation worth fulfilling.
Benel D. Lagua is executive vice president at the Development Bank of the Philippines. He is an active Finex member and a long time advocate of risk-based lending for small and medium enterprises. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.