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April 22, 2010

Is Everybody Really Above Average?

Filed under: Performance Management — Tags: 10:17 am

Appraisal inflation is common in many organizations. But lenient or overly generous appraisals can have unintended consequences and real costs. Some of those issues and what can be done about them are discussed below.

The Employee Is Hurt

  • Lack of accurate & meaningful feedback isn’t provided and the employee isn’t really made aware of his strengths or weaknesses.
  • There is no understanding that a gap may exist between how an employee views herself and how a manager views her.
  • Without true feedback the employee is unable to focus on what he needs to do to improve and to plan training or activities around that. An employee may have limited opportunity for advancement or development if she’s not aware of what she needs to work on.
  • An employee may be unaware that any problems exist.
  • There may be no motivation for an employee to change.

 


The Organization Suffers

  • The status quo will continue. Marginal employees will stay marginal. Good employees don’t become great and star performers don’t achieve their potential.
  • Company productivity will not be what it could be. Numerous studies have shown that there is a high correlation between organizations with effective performance appraisal systems and strong company valuation
  • Poor communication is one of the most common workplace problems. Inadequate appraisal communication contributes to that.
  • Termination or corrective action decisions are difficult to justify if documentation, including appraisals, don’t support them.
  • Company credibility suffers.
  • The ability to groom employees for advancement, transfers, succession planning, and simply having a cross trained workforce is hindered.
    • Promotion and pay decisions become less objective and credible.

Other Employees Are Affected

  • If everybody is above average then some employees may wonder why they should work hard and try to distinguish themselves?
  • If you’re a mediocre performer there’s little incentive to improve.
  • Pay may be viewed more as an entitlement than as a reward to distinguish top performance. Some employees will be paid more than they deserve and truly outstanding employees will be paid less than they should.
  • Promotions may not be seen as objective or given to the most deserving staff members.
  • Most people compare themselves to what others do and receive. A less than meaningful appraisal system can leave people unmotivated and resentful.

What Can Be Done?

  • Most importantly, train your managers. Managers need to understand how to conduct effective, objective appraisals and why they’re so important.
  • Inform all employees regarding your performance standards, criteria and the appraisal process.
  • Use an appraisal system in which factors and goals are clearly defined and there are “bright lines” between performance levels which everyone understands.
  • HR or senior management can review appraisals to ensure they are properly completed, well documented to support ratings, and meet established guidelines.
  • Managers can be evaluated on how well they complete appraisals. Are they on time, meaningful, professional, and honest?
  • Some organizations use a “forced distribution” system in which only a designated percentage of employees could be given superior scores. While this certainly limits the number of employees who would be considered “above average” it can also cause organizational problems and should only be implemented with significant thought and planning.
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