Herbal Life Advt1

Herbal Life Advt1

Thursday, 31 January 2013

Part 5- How to define Performance Rating scale and associating it with performance percentage?


How to Build mature performance management system without any automation software?- Part 5- How to define Performance Rating scale and associating it with performance percentage.



Many organization use rating scale to define performance of an individual. Often, there is confusion in the mind of HR professional, on deciding what should be the performance rating pattern i.e. whether to choose 5 rating scale or 10.

I have used both the rating scales and find 5 rating scale is better and easy to monitor. It also can be understand by both employee and manager easily. Although more than rating, meaning of rating is important. If rating 1 is considered as top level performance, then employee will consider it superior, else if, rating 5 is considered as top level performance, then employee will consider it superior.

For my HR friends, I am sharing below, which describes, 5 Rating scale along with significance of rating scale, detailed meaning of rating, suggested bell curve distribution and what is the action plan suggested for manager to take against employees who scores respective rating. For my friend who do not understand concept of Bell curve can google it. In brief, it is basically a performance pattern which can be exhibited by a group of employees.


Rating 5 (Exemplary Performance)
Meaning :  Performance is exemplary. Extremely smart worker, who successfully innovates and is cut above the rest of his peers in terms of ability.
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan to groom the employee towards same. Ii. Promotion Recommendations : Ready for next level growth and same should be recommended with supporting

Rating 4 (Exceeds Expectation)
Meaning :  Performance substantially exceeds the standard expected in all areas of the job. The review / assessment indicates that the jobholder has not only achieved effective results against all of the performance criteria but also has been able to give Value addition to client in terms of impact & satisfaction.
Distribution %  : 25%
Plan of Action against each Rating ( to be provided by Manager ) : i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan for grooming the employee towards the same. Ii. Promotion Recommendation : Ready for next level growth and same should be recommended with supporting i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan for grooming the employee towards the same. Ii. Training Needs

Rating 3 (Meets Expectation)
Meaning :  Employee is meeting the job expectation set for profile. 
Distribution %  : 45%
Plan of Action against each Rating ( to be provided by Manager ) : i.    Opportunity Areas : areas that the person can focus on for further growth or development for higher rating ii. Training Needs.

Rating 2 (Does not meet expectation- But can be improved)
Meaning :  Employee is not meeting expectation set for him. Need improvement. There is possibility of improvement in performance if given guidance. 
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.      Grace : Borderline. Not met expectation due to external factors and hence given grace, ii.      PIP : Improvement required and hence to be put in PIP iii. Drop from role / organisation due to incompetence

Rating 1 (Does not meet expectation- Poor Performance)
Meaning :  Employee is not meeting expectation set for him. Very poor performance and need immediate improvement. 
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.     Immediately put under PIP (Performance improvement Plan ii) Out of organization, in case no improvement


Relation Performance percentage with Performance rating:

Another question, which comes in our mind, how to relate performance percentages with performance rating? Now it can differ from manager to manager and organization to organization, but as HR you need to define a range which can be referred by both employee and manager. Of course, a little deviation is ok, let’s say 20% up or down but it should be monitored properly else every manager will have its own definition of rating scale and later on we will find it difficult to bring symmetry in same.

Below is the range, which I use for linking performance rating and performance percentages.

Rating            Significance                                                 Performance
5                      Exemplary Performance                           121% and above
4                      Exceeds Expectation                                 110% to 120%
3                      Meets expectation                                     90% to 109%
2                      Sometime meets expectation                   70% to 89%
1                      Does not meet expectation                       <70%




Further we will see, how above association is used to evaluate employee performance and assign performance rating to him?



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22 comments:

Jyoti Arora said...

Very useful article. But i think Performance percentage for Meets expectation has to be between 90% - 100% & above 100% has to be Exceeds expectations.

Govind Negi said...

Dear Jyoti,

Very good observation.

Reason behind keeping it till 109% is quite simple. Like in case we are suggesting to give 3 to a person who is 90% i.e. 10% less than 100%, similarly if employee achieve 9% more than it also should be treated as Rating 3. Another reason is, if we consider above 100% as Rating 4 then in that case, an employee achieving 1% extra which is very marginal increase in performance percentage will be treated as Rating 4. Hence it depends how management want to take it.

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Govind Negi said...

Thanks Mr Eric for appreciation.

Anonymous said...

Very well said and written!!good work!!can u tell how did u evaluate the distribution percentage for all 5 ratings?

Govind Negi said...

Dear Friend,

Thanks for your appreciation. Distribution among rating is based on concept on Bell curve.

Himshikha Khati said...

According to you which is the most accepted and prevalent PA method a) BARS b)bell curve c)360 degree and why?

Govind Negi said...

All three has own pro and cons. It actually depends upon what kind of industry you are in, how much manpower you have to execute performance management, how much serious management is towards performance management. My personal view is that you should have combination of all styles which fits to your company and need. Managers should be very well trained to execute BARS system, 360 degree is not that easy to implement but effective, bell curve can be implemented with any type of performance management system. Hence i would suggest build KRA, weightage, evaluation criteria and final PMDP Should be on basis of achievement against each KRA, include BARS and give around 30% weightage to that also, if possible else simply keep one section of critical to success factor and let manager evaluate that. Once all done see fitment as per bell curve. If you have bandwidth and money to spend on Bell curve please go ahead.

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Sarva Sreshta said...

Thank you Mr.Govind ,

Please keep continue to share more information related to performance rating

Govind Negi said...

You are always welcome Sarva

Anonymous said...

Hi,

Could you please help me with performance rating with 1-10.. i totally understand about 1-5. This appraisal method is very first time for me..Thanks

Govind Negi said...

Dear Friend,

The only difference between a 5 scale performance rating and 10 scale performance rating is the number of ratings you get to describe performance of the person. In 5 scale rating system you have 5 different meaning and in 10 scale you have option of giving 10 different meanings. also you can define range for a particular rating significance eg. 1-3 : Poor performers.

Anonymous said...

We usually use either a 5 point scale or 10 point scale. Most employees end up giving a average (middle rating. What if we use a 4 point scale and how do we define it?

Govind Negi said...

Dear Friend,

You can define 4 rating scale also. You need to give meaning to each rating scale. Eg 1-Below expectation, 2-Fit to Expectation 3-Above Expectation 4-Exemplary performance. Rest will remain as mentioned in my post

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

hi!!! should the appraisal information passed on to everyone in the organisation?

Govind Negi said...

Dear Friend,

Each employee should know what is the status of his appraisal.

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