Drop It a Notch

In my book I recommend that you rate performance on a 1-5 scale on performance evaluations. This recommendation was based on lots of research, personal experience and conversations with experts. The second most popular rating scale was 1-3. And then there were a variety of alternatives.

I have come to the conclusion after additional experience with Clients and a lot of thought that it is time to change my recommendation. Here is why. I find too many companies struggling with the 1-5 scale because employees want to be rated a 5, yet in that 1-5 scale the 5 rating should only be given out very rarely.

For instance I worked with a client awhile back. He shared a story about a company he worked at previously. When he was hired the average performance review rating was something like a 4.8 or 4.9 on a five-point scale. However, the company was losing money! How could the scores be so high when the company is losing money!

Too often people instinctively compare a five-point scale to grades they received when they went to school. They think an A is a 5; a B is a 4; a C is a 3 and so forth. No one who is a performer wants to be rated a 3 even if in reality that means they’re doing a good job.

I’m still seeing this happen today. Even though the overwhelming response that I got from experts and recommendations in my research says the 5-point scale works best, my experience is this is not true.

Therefore I am recommending you use a different rating scale for performance evaluations. My suggestion is you use a four-point scale. When you rate someone a 1, this still means Not Acceptable. When you rate someone a 2, this still means Needs Improvement. When you rate someone a 3, this still means that they are meeting the requirements of the job. However, I want you to use the descriptor Solid Performer rather than Meets Job Requirements.

My experience with clients has now led me to overwhelmingly conclude that very few employees want to be told that their performance “meets job requirements.” How boring! How average! Think about it: The guy goes home at the end of the day and his wife says, “Well, how did you get rated in your performance review?” He replies, “Well, I’m told I meet job requirements so I guess I’m doing okay. How about a beer and let’s watch some TV?” It is almost totally UNmotivating!

This is why I think it’s so important to change a the #3 rating descriptor to confirm the employee is a Solid Performer. Everyone wants to be a solid performer and to be recognized as a contributor. Telling someone that they “meet job requirements” is about as motivating as telling someone they’re lucky to have a job in the first place.

So rating someone a 1 means their performance is Not Acceptable. You need this rating. There are times when you need to communicate very clearly that the person is not performing up to your standards. In the Comments section of the performance review make certain you explain specifically what the standards are for good performance and the steps you feel the person needs to take to improve.

Rating an employee a 2 means their work Needs Improvement. This rating is very valuable to confirm to an employee that you appreciate their putting forth the effort, but that they need to improve. In the Comments section of their performance review make certain you explain specifically the type of improvement you desire.

The 3 rating on your performance review communicates to the employee that day are a Solid Performer and a valuable member of your team. I really believe reinforcing the fact that your people are regular contributors by changing this descriptor is an important piece of the puzzle to improve retention rates. Remember your people want to be evaluated even though you may dread taking the time to write the performance review. They want to know how they’re doing. And they want to be recognized for what they’re accomplishing.

The last rating level, #4, means Outstanding performance. By limiting the rating scale to only four levels this significantly increases your ability to limit the number of high ratings you give to your employees. The 4 basically communicates to them that in a particular behavior or goal they were awesome. Give out 4 ratings rarely to increase the desire of your results oriented employees to achieve them.