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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