One of the reasons that performance management gets a bad rap is because we don't tend to focus on the most important part of the process: giving employees continuous feedback. The performance management rating scale isn't the essential component. That doesn't mean I'm against rating scales. It's true, they help the process, but our focus should be on the feedback conversations.
Here's the reason: The scale is usually 5 points with 1 being "unsatisfactory or not meeting standard" and 5 being "outstanding or exceeding the standard." It's used to rate broad topics like attendance, quality of work, job knowledge, etc. But simply getting an assigned number isn't a substitute for specific feedback. It doesn't tell the employee about expectations and where they can improve.
Be careful about bias when giving employee feedback and ratings
In fairness, some organizations do a good job of giving managers definitions for each point on the rating scale. But managers have to be careful that bias doesn't creep into their evaluation. For example, leniency can occur when managers have a lot of performance appraisals to complete. Everyone becomes "satisfactory" in order to get the reviews completed.
Another bias happens when managers feel no one is perfect and not worthy of the highest rating. This gets particularly tricky when one manager is willing to give an employee the highest rating and another isn't. Not only is the manager acting with bias, but the organization isn't consistent in the way they measure performance.
Make sure managers are trained in giving employee feedback
One of the ways to combat bias is to make sure that managers are trained on the proper way to evaluate performance and have feedback conversations. Many organizations that use a rating scale assign the center point (usually a 3 rating) with "meeting the company performance standard." Employees should know what meeting the standard looks like. This is something that should have be communicated during onboarding and subsequent training. This is why feedback is important.
The importance of feedback over ratings
We often spend incredible amounts of time preparing managers for the feedback conversations they need to have when employee performance does not meet the standard. But we need to spend equal time thinking about the opposite. How do employees know when they are performing above the standard? If so, how and when is that communicated to them? Managers have the opportunity to tell employees in a very specific way when they exceed the company standard.
If you want employees to go above and beyond, give 110% or whatever other cliché you'd like to use... then you have to tell them what exceptional performance looks like. They can't do it if they don't know.
And obviously, when it comes to telling employees they're not meeting the standard, we're not telling employees because we want them to replicate the behavior but because we don't want employees to.
How employee feedback helps them improve
Here's an example of why feedback is so critically important. If I go to a restaurant and they get my order wrong, I should tell them. If I don't tell them, they don't have the opportunity to fix the situation. If I don't tell them, they will continue to do the same thing.
It's the same with employee performance. If managers don't coach employees so they can fix the situation, then how can we expect them to improve?
Make employee feedback conversations continuous
Over the years, I've met many managers who really try to avoid these types of conversations during the performance review meeting. They feel the performance review is stressful enough without adding a lot of feedback. I totally agree that performance reviews can be stressful - especially if they are a part of an employee's merit increase. That's why performance feedback should be continuous.
Employees should know how they are performing all the time. If they do something great, managers shouldn't wait until the annual performance review to tell them. And if they do something not-so-great, they should know as close as possible to when it happens. This gives the employee a chance to improve and the performance review meeting becomes less stressful because the employee knows where they stand.
The point of performance management
Performance rating scales are very much a part of the review process and they serve a function. But they aren't the most important part. Feedback - specific, timely feedback - is the key to performance management success. Teach managers how to deliver it well and that will deliver what performance management is designed to do - improved employee performance.