Rating Methods and Rating Errors

Evaluating Employee Performance

Ian Pratt

Rating Methods Overview

Choosing the ideal rating methods for your employee evaluations depends on the number of people you have in each role your rating, the size of your organization and the benefit you receive from investing in your evaluation tools. You also need to consider the resources that you have available to develop your appraisal framework.

Rating methods vary considerably in their complexity ranging from a basic summation of performance written by the employee’s manager though to the use of complex behavioural descriptors to compare and contrast individual performance.

In practice you will find that most employee performance evaluations include a combination of two or more of the following rating methods.

  • Graphic rating scale
  • Global Rating
  • Essay Method
  • Behavioural anchored rating scales (BARS)
  • Management by objectives

The Graphic Rating Scale

Graphic rating scales are used in many surveys, they normally consist of four or five rating criteria listed, such as

  • Unsatisfactory
  • Below expectation
  • Satisfactory
  • Above average
  • Outstanding

An example of this type of rating scale

Rating Method - Graphic Rating Scale

Typically there will be a range of performance criteria such as productivity, quality, teamwork, customer service, or concern for safety etc. The team leader or manager will rate each employee based on their own judgment of the employee’s performance.

This method is typically subject to considerable bias, which makes it hard to compare people doing different jobs or even the same job in different teams. There is generally no common criterion to determine the difference between each of the graduations on the rating scale.

To remove the bias some businesses assign criteria to some of the elements.

For example: a sales person may score a 3 if they meet their sales budget, exceeding budget by 10% scores a 4 and exceeding by 20% of more scores a 5, If they miss target by 10% they score a 3 and if they miss by 20% or more they score a 1. You will find that most efforts to clarify the rating criteria tend to be on those rating criteria that are quantitative.

The Global Rating Methods

Some organizations use a single global rating of overall job performance to evaluate an employee. While this method would be expedient for the employer and may assist with decision such as paying bonus and allocating performance based pay increases, it is unlikely to provide the employee with any ideas on how to improve their performance.

For example

Global Rating Scale

Note: The author does not recommended using a global rating scale for your employee performance evaluations

The Essay Method

In the essay method the appraiser writes a statement to describe the employee’s strengths and weaknesses and makes recommendations about the employee’s developmental needs. This method gives the appraiser some freedom to describe the employee’s unique characteristics, readiness for promotion and special talents.

This method is reliant on the appraisers writing skills and their ability to express their thoughts through the written word. A checklist of criteria to include in the evaluation will improve consistency, the checklist may include items such as

  • Job performance
  • Quality of work
  • Teamwork

However, once this checklist is created you could simply use it to create a graphic rating scale and then provide a comments section for appraiser to add additional comments.

When used in conjunction with other methods, such as the graphic rating scale, the essay method does not require a lengthy statement and can add value to your employee performance evaluations.

Behaviourally Anchored Rating Scales (BARS)

The behavioural Anchored Rating Scale method is normally used only for the assessment of employee behaviour, for other performance criteria such as sales results other methods of appraisal are generally used.

As with the graphic rating scale, the behavioural anchored rating scale aims to assign a score to a range of performance criteria. However, the BARS method focuses only on observable behaviour and provides examples of this observable behaviour for each score. This makes it easier to have consistent rating across a large organization.

For example when assessing a leader on their passion for people you may consider

Rating Methods - BARS

Rating Methods - BARS

Rating Methods - BARS

Management by Objectives (MBO)

Management by objectives is a process where longer-term goals are set, normally collaboratively, for the business as a whole. These goals are then cascaded down to each division or sub-unit of the business.

These goals tend to range from 12 month to three years. However, some shorter-term objectives can also be set.

You will find MBO is generally used to define the performance standards of people completing non-routine tasks such as management tasks or short-term projects.

How it works

  • The manager and employee (the employee is normally a manager too) agree on the employee’s goals and how they will be measured.
  • Once the goals are set they meet regularly to discuss progress towards these goals. It is also a good idea to discuss the method by which the goals will be achieved. During the discussions the manager provides feedback on progress towards interim goals.
  • The manager and employee need to be open to removing goals that become inappropriate and to add new goals that become required.
  • At the end of the agreed period the manager completes a review of the employee’s performance which is a summary of the ongoing conversations

In MBO Programs there also needs to be an assessment of the way in which the goals were achieved, for example

  • Did the project manager follow the business project management processes?
  • Were stakeholders engaged appropriately?
  • Did the manager meet objectives in an ethical manner?
  • Was the brand or long-term future of the business placed at risk?

In your employee performance evaluations, you will find that MBO programs tend to be used in conjunction with other appraisal systems to get a complete view of job performance.

Choosing the right rating method for your business

Performance Appraisal

You will now have an overview of the five common rating methods used for employee performance evaluation. Whilst they are all presented here as discrete methods you will find that in most cases a combination of rating methods is used.

The ideal rating method for your employee performance evaluations is the one that “makes sense” for you and your employees. To determine the right method for your application you need to determine

  • How many people will be evaluated?
  • What resources do you have to invest in developing your rating system?
  • How much value will additional investment in the rating method deliver for your business?
  • How frequently can you measure performance?

Rating Methods Bias

To ensure the integrity of the performance appraisal leaders should rate their employees in an unbiased and impartial manner. However, this is easier said than done.

If you are aware of any biases that you may have you can reduce the impact of these biases on your rating resulting in your employees receiving a fairer job performance appraisal.

The 6 key rating errors or biases that you will need to be aware of are

  • The Halo Effect
  • Contrast Errors
  • Recency Bias
  • Leniency Bias
  • Severity Bias
  • Self Serving Bias

Now let’s look at each in more detail

The Halo Effect

The halo effect is the tendency of the leader to judge all aspects of an individual using a general impression that was formed on only one or a few of the individual’s characteristics.

An example might be a leader who observes an employee providing excellent service to a customer and then leader uses this positive view of the employee to assess other areas of the employee’s performance favourably.

Equally it could go the other way. For example if the leader formed an early negative view of the employee’s customer service capabilities may then assess other areas of the employee’s performance negatively.

To avoid the halo effect

When completing job performance appraisal, leaders should collect sufficient data to make realistic judgements in all areas of the employee’s performance.

Contrast Errors

The contrast error occurs when a leader compares subordinates with one another instead of against performance standards. This may result in an average employee being rated as a high performer when compared to their underperforming peers, or a good performer can be rated as a poor performer when compared to their high performing peers.

You will find this is more likely to occur when using forced rating systems, where each team is required to have an equal number of high, middle and low performers. In a high performing team those rated as low performers maybe better than the middle and high performers in a poor performing team. Even with forced rating, you need to be open to the possibility that your bottom performers may still good performers.

Recency Bias

The recency bias occurs where a leader assigns ratings based only on the employee’s most recent performance rather than the employee’s performance over the entire period being rated.

To reduce the risk of this error you should ideally review your one-on-one notes throughout the whole year or rating period to ensure an objective rating.

Leniency Bias

The leniency bias occurs where a leader is too soft or too generous when rating the employee’s performance. This is often due to manager discomfort with giving an honest rating.

To counter the risk of leniency you can

  • Run your performance rating past a Human Resource Manager or your manager for comment before your performance appraisal interviews commence, or
  • Compare you team with another team doing the same work and verify that your ratings are consistent

Severity Bias

The severity bias occurs when a leader is too hard or harsh when rating their employee’s performance.

You can counter the severity bias the same way that you can counter the leniency bias.

Self-Serving Bias

The self-serving bias occurs when the leader tends to perceive that they were personally responsible for success and others were responsible for failure. With the self serving bias a leader will perceive that a high performing team member has succeeded due to the leader’s great leadership, however a poor performing team member is the result of poor training or poor coaching and has little to do with the leader’s leadership.

A leader looking fro a promotion may rate their team higher than their actual performance to showcase their leadership readiness.

Attribution Bias

We favour those in our ‘in’ groups, by giving second chances to them and the benefit of the doubt; while for people outside our ‘in’ group don’t receive the same leniency.